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How Does Bankruptcy Come About

Jan 27, 2008
Bankruptcy does not care what your race, sex or religion is. It does not care if you are upper, middle or lower class. Bankruptcy can happen to anyone and it can be caused by several factors. Divorce, lawsuits, job loss, medical bills, and business failure can all be cause for bankruptcy. Society has led us to believe that people who are lazy, irresponsible and careless are the only people who file bankruptcy. In all actuality people with clean credit history who are homebuyers and have steady jobs are subject to bankruptcy. An example of this is a woman we will call Ann Marie. Ann Marie has been married for twenty-eight years. She does not drive and is a homemaker. Her husband oversees all of the finances and suddenly passes away due to heart failure. Ann Marie has no savings and has bills for her husband's unexpected funeral. She has monthly bills that are due for utilities and the mortgage payment. Harassing bill collection calls are coming in day and night. Ann Marie is becoming depressed and is left to consider personal bankruptcy.

As unfortunate as this example is, it happens to people. It could happen to you or me. We can pay our debts on time and keep our credit history squeaky clean and yet bankruptcy could be something we face in our unforeseen futures. Next time you hear of a neighbor or business that going through bankruptcy you will smile and be supportive instead of listening to the whispers of his or her misuse of finances. Perhaps it is something more that has happened to you or me.

Non-profit debt counselors are counselors who are trained to help people who are in debt and financial turmoil. Debt counselors who work for non-profit organizations provide their services for free, as an educational program.

A debt counselor will use tools to assess the debt of their clients and to help the person in debt successfully get on a repayment plan. This process includes you laying all of your finances on the table for the debt counselor to analyze. They look at your credit report, look at your income, and dissect your assets and debts. After they look at your situation, they will either advise you to pay off your debt or file for bankruptcy. Most counselors only tell you to file for bankruptcy as a last resort. Most often they can work with your creditors to develop a good payment schedule. Sure, you'll be paying off your debt instead of simply erasing it, however the process will not be as damaging to your credit and you'll feel great knowing you paid everything off.

When choosing a debt counselor to avoid bankruptcy, be sure you are seeking one that works with a non-profit company. Some will charge you a monthly fee for managing your payments, however a non-profit company will not force you to pay a monthly fee. In addition, be sure you follow up on your payments to ensure they're being applied to your accounts each month.
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