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When unexpected events cause debt, consider bankruptcy filing

Arizona residents who are struggling to make ends meet may be financially capable of dealing with everyday expenses, but unexpected expenses may overwhelm them. Unanticipated events such as sudden illness, accident or death may create debts where none existed previously.

For those Arizonans struggling with debt, filing for personal bankruptcy, Chapter 7 or Chapter 13, depending on income eligibility, may be the best way to wipe out bills and begin their financial life anew.

An unexpected incident is the cause of financial upheaval in the life of a grieving father who recently lost his son. The California gardener was the co-signor on his son's college loans that he expected his son to pay off after graduating and finding a job.

Tragically, on his way back from a job interview, the college graduate was unable to maintain control over his car and it rolled over. He died in the accident.

Even though the deceased's federal loans were discharged after his death, the father learned that he still had to make the loan payments to the private lenders, as he was fully liable as a co-signor. As his father was still grieving this terrible loss, he began receiving phone calls from debt collectors demanding he pay back his son's loans.

Many of the private lenders were unidentifiable despite his numerous attempts to get in touch with them in order to come to an agreement regarding the loans. In addition to this, creditors hounded him several times a day for more than a year demanding payments.

Readers of the Mesa, Arizona, Bankruptcy Blog may be aware that student loans may not be discharged through bankruptcy proceedings unless the debtor can demonstrate undue hardship, which is a very stringent standard. The father is hoping for the best as he awaits a ruling from the bankruptcy judge.

Filing for bankruptcy may be a difficult decision, but often it is the best one a debtor can make in the face of increasing bills to regain control of his or her financial life and stop creditor harassment for once and for all.

Source: ProPublica, "Grieving father struggles to pay dead son's student loans," Marian Wang, June 14, 2012