Whether or not to use bankruptcy, is a long decision making process. It is not filed simply as a result of excessive spending. In most circumstances there is a trigger event such as job loss, medical condition or divorce that causes someone to fall behind on their bills. Debt problems equal long term problems. A common question is “How will bankruptcy affect me?” The fact is, existing debt may already be affecting someone’s ability to ever retire or buy a house. When the household budget can only afford living expenses, then there is no money to put away for the future. Creditor payments often put people in this position, causing them to file bankruptcy so the can actually save money for themselves.

People thinking about bankruptcy should also consider their future if they don’t file. It’s assumed that bankruptcy ruins credit. But for someone in a bad enough circumstance, their debt-to-income ratio keeps them from building any credit in the first place. One major factor in calculating credit is debt-to-income ratio. Creditors want to get an idea of a consumer’s ability to make payments on any new account. A bad debt-to-income ratio proves a person can’t afford any more expenses. At this time many people will choose to file bankruptcy since their budget leaves no room to save money or build any credit.

Bankruptcy is being filed at alarming rates. It doesn't carry the stigma it did in the past. Remember the purpose of bankruptcy is protection from creditors. The decision to file is rarely made solely as an effort to escape debt. Debts are typically affordable when they were originally incurred. Of course the plan was to pay them off over time. Creditors offer minimum payments that are attractive to the consumer. But minimum payments only provide a way to keep accounts current, they typically only pay a small portion of principle. These payments don't get people out of debt. This is the base of the issue, where any event, like job loss, can trigger a bad snowball affect. Now, the stigma of filing bankruptcy is compared to the stigma of getting sued, getting foreclosed on or the inability to provide for dependants.

Owning a home, while having credit card debt, is certainly common. But when debt gets out of control bankruptcy provides protections from judgment liens being placed on property. Many homeowners consider a second mortgage to pay off unsecured debts. But refinancing only makes mortgage payments go up. If credit cards are unaffordable does it makes sense to attach them to the title of your house?

For some people, bankruptcy is the only way to live comfortably again. Understandably, many people do want to payback their debts. Bankruptcy is the only way to pay creditors on your own terms. Bankruptcy stops creditors from collecting, not debtors from paying. If you want to send discharged creditors money after bankruptcy you can, it’s completely your choice.

Other common Reason for Filing Bankruptcy;

• The monthly household budget doesn’t afford paying necessities while maintaining creditor payments
• Stop existing or pending wage garnishments
• Stop collection calls
• Medical debt with no insurance
• Can't afford tax repayment
• Car repossession debt offers no repayment options
• Insurance debt from an auto accident