Sometimes, even despite our best planning and efforts, we fall into financial difficulty. While scary to think about, it really can happen to anyone. When this happens, you may be unable to keep up with the minimum payments on your outstanding debt obligations. Bankruptcy may provide you with the relief you need. Here, we discuss some of the more common reasons people end up filing for bankruptcy.
What are the most common reasons for bankruptcy?
One of the most common reasons for bankruptcy filings involves medical expenses. In fact, the American Journal of Public Health published a study in 2019 stating that 66.5% of bankruptcies in the United States were caused by medical-related issues. These issues could relate to the inability to keep up with high medical bills or because a person missed time from work due to medical issues. Even still, medical bills can be staggering, and unexpected expenses. This is true even for those with health insurance. High deductibles and copays quickly add up. A serious disease, a debilitating injury, any of these things can lead to medical bills quickly piling up. It can rapidly become unmanageable, and people file bankruptcy as a result.
It may come as no surprise that job loss is another common reason for bankruptcy filings. When a job is lost either to being laid off or resigning, the loss of income can quickly take its toll on a person’s financial well-being. Even when an individual is fortunate enough to receive a severance package, without finding a replacement job quickly, money can get tight fast. This difficult situation can be compounded when there is no emergency fund on hand to bridge employment gaps. Once something like credit card debt becomes unmanageable, even the minimum payments on interest can prove difficult. This can be what drives people to file bankruptcy.
Credit card debt is a source of woe for many. Either due to credit mismanagement or simply poor spending habits, credit card debt can snowball. Once you find yourself being unable to keep up with minimum payments, compounding interest can seemingly send you down a never-ending financial hole. While some may try to survive through consolidation, this usually does not have the kind of favorable results people hope for. Home equity loans are also sometimes used in a last-minute effort to manage the credit card debt, but the funds can quickly run out and leave a person facing foreclosure on their home on top of everything else.
Divorce is another common cause of bankruptcy filings. First, there are the often substantial legal fees involved in getting through and finalizing a divorce that can put serious financial pressure on a person. After all of that, there is still the fact that it is more expensive to manage two separate households than it is for two people to live together in one household. The cost of divorce on top of the different financial realities of post-divorce life can all too easily lead to bankruptcy.
Miami Valley Bankruptcy Attorneys
No matter what life circumstances have brought you into financial difficulties, Miami Valley Bankruptcy is here to help. Contact us today.