There are three common situations in which people decide to file for bankruptcy.
- A creditor has taken action to collect a debt that threatens the individual's livelihood. Some examples include garnishment of your wages or bank account, repossession of your vehicle, foreclosure of your home or creditor harassment.
- A traumatic event has happened that has reduced the person's income or increased the person's debts and bankruptcy is often the best option to pick up the financial pieces. Some examples include divorce, long- term employment, serious medical issues, or death of a family member.
- The person has become overwhelmed with debt and has no reasonable prospect of improving his or her credit and debt situation other the filing a bankruptcy.