Bankruptcy offers a financial lifeline for those who are unable to pay their debts, but the people who could most benefit from the process are often hesitant, stymied by the taboo that has been attached to seeking economic help. Many falsely believe that those who file for bankruptcy are simply undisciplined or irresponsible in their spending habits This is unfortunate and reflects a lack of understanding of the most common drivers of overwhelming debt. Let’s take a look at the most common reasons that people seek bankruptcy protection.

  • Medical bills – When people filing for bankruptcy are asked what drove them to the point of economic emergency, more than two-thirds point to medical issues. For some, this is simply the bills that have been attached to illness or accident, but there are additional expenses related to medical circumstances, including being unable to return to work in order to pay either mounting treatment expenses or the costs of daily living.
  • Employment – Whether an individual resigns, is laid off, or is fired, losing a job means losing income. Unfortunately, though money isn’t coming in, the bills don’t stop. A recent survey revealed that 51% of Americans have less than three months’ worth of savings to help get them through a financial emergency, and when an individual loses their job they also lose their health insurance, creating the potential for a catastrophic cycle.
  • Overreliance on or misuse of credit cards – Many people simply do not understand the dangers of overreliance on their credit cards. They charge more than they can afford to pay back on time, and then their debt increases as interest rates and late fees get added on to the amount that they initially charged.
  • Changes in marital status – Marriage represents more than a relationship. For many it is the key to financial stability, and when a divorce or separation occurs one or both spouses may find themselves unable to pay bills that had previously been shared. In addition to existing debts and obligations, divorce may introduce additional costs such as alimony or child support.
  • Other emergencies – Beyond the events listed above, natural disasters, household repairs, costs related to lawsuits, and other unexpected events can create financial turmoil.

If you are considering bankruptcy, it is important for you to know that you are not alone. For assistance in navigating this challenging process, contact our experienced attorneys today.

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