The Real Number One Reason for Bankruptcy Filings

 Posted on February 18, 2015 in Bankruptcy

Historically, filing for bankruptcy was typically not considered an option for many people who found themselves struggling with mounting and uncontrollable debt. The stigma attached to bankruptcy was one of shame and failure. However, over the past decade or so, that stigma began to fade as many people realized that bankruptcy was often the only solution to the financial crisis they found themselves in.

In 2012, over 1.2 million people in this country filed for bankruptcy. Prior studies have shown that the leading causes of bankruptcy are medical expenses, unemployment, unexpected life events, and credit card debt.

But just how much of role do medical expenses play in causing people to have to file for bankruptcy? Is it actually one of the leading reasons as we have been led to believe? Many analysts and studies point to the high price of medical care–not only for people who have no medical insurance–but also for people who do have medical coverage as the number one leading cause. It has been cited as the cause of sixty percent of bankruptcy filings each year. However, this statistic was actually garnered from a 2007 Harvard University study. A recent study reached different a conclusion.

The Center for Consumer Recovery analyzed over 3,000 bankruptcies which were filed in 2012. The research team looked over each bankruptcy petition and credit report of each participant, as well as conducted an interview with each one. They found that medical expenses were not the leading cause of the bankruptcy. Instead, in 78 percent of the study cases, it was debt litigation that resulted in the bankruptcy filing.

Three-fourths of participants shared the common experiences of harassment form collection agencies and debt collection companies, including threats of lawsuits. It was these threats and harassment that forced the decision to finally file for bankruptcy.

If you are being threatened and harassed by creditors, bankruptcy may be the best option for you. Contact an experienced bankruptcy lawyer in San Antonio today for a free consultation.