A legal declaration that a person or business can no longer pay their debts is known as bankruptcy. There are many causes why people would decide to declare bankruptcy, and here are some of the top causes:

1. Job loss - One of the most common causes why people choose to go bankrupt is because they lost their job. The economy's current bad state has made a lot of people to leave their work, and therefore leaving them incapable of providing for themselves and their family. A job loss may also mean losing insurance previously provided by their employer.

2. Medical bills - Sometimes, a terrible accident, illness or even just the loss of insurance caused by job loss, can be enough reason for a person to file for bankruptcy. Nowadays, medical costs are really expensive and could pile up to inconceivable amounts. Filing for Chapter 7 Bankruptcy can greatly reduce or even completely eliminate these debts.

3. Preventing repossession of properties - If your home, car, or other highly valuable possession of yours is being repossessed, filing for Chapter 13 bankruptcy could force the creditor to return said items to you. After this, your past missed payments will be consolidated into your bankruptcy plan. What will happen is you will give monthly payments to the trustee of your bankruptcy plan, and they in turn will pay the finance company.

4. Catch up on missed mortgage payments and stop home foreclosure - Filing for Chapter 13 Bankruptcy won't get rid of your property mortgage, but it can stop foreclosure before sales or bidding will occur. This can then allow you to repay your mortgage amount left (also called mortgage arrears).

5. Put a halt to harassing calls and behavior from creditors - More often than not, creditors tend to do debt collection in an unpleasant manner. Their abusive and frequently annoying behavior is very unneeded, and in fact, unethical. Filing for bankruptcy can put a stop to the demands of many creditors, thus halting the many harassing phone calls and bad behavior.

There are plenty of other reasons to file for bankruptcy. Of course, the best way to handle whatever bad financial situation is to consult the legal department.