Top 3 Reasons People File for Bankruptcy

 Posted on April 28, 2022 in Bankruptcy

Debt is a significant issue for millions of people in the United States. In some cases, these debts may be manageable, and a person or family may be able to make affordable payments toward a home mortgage, auto loans, student loans, and/or credit cards while being able to cover their regular living expenses. Unfortunately, there are many situations where a family’s debts may become unmanageable, and they may begin considering bankruptcy. Because of the stigma surrounding bankruptcy, those who are in this position may feel that they will be looked down upon. However, understanding the reasons that people often file for bankruptcy can help a person realize that they are not alone and that they can benefit by receiving relief from their debts.

Bankruptcy Is Usually Based on Issues Other Than Financial Irresponsibility

The stereotypical bankruptcy involves a person who has engaged in reckless spending without considering the consequences of their actions. Many people believe that if a person files for bankruptcy, this is a sign that they have racked up large credit card bills, spent money on unnecessary luxuries, and generally behaved irresponsibly. However, in most bankruptcy cases, this is far from the truth. In fact, people are likely to encounter large debts because of issues such as:

• Medical bills - Around two-thirds of all bankruptcy cases involve medical debts. Even when a person has health insurance, a medical emergency or a major procedure may result in tens of thousands of dollars in medical bills. These issues are often unforeseeable, and a family may find themselves in an impossible situation in which they owe huge amounts of money with no possibility of being able to pay off these debts. Using bankruptcy to wipe out medical debts is often the best solution in these cases.

• Income reduction - There are many issues that may affect the income a person earns. Changes in the economy may result in layoffs, leaving a person scrambling to find a new job that will allow them to earn enough money to support themselves and their family. Health issues can be a factor in these cases, and a person who experiences an unexpected illness or injury may be unable to work full time. It can be difficult or impossible to plan for these circumstances, and if a person is barely able to cover ongoing living expenses, they can quickly get behind on debts. Bankruptcy may be necessary in these cases to ensure that a family will be able to maintain financial stability.

• Divorce - Financial problems may be a reason for the breakdown of a couple’s marriage, but even if a family is financially stable, the divorce process can be very expensive, and it may require each spouse to pay thousands or tens of thousands of dollars in legal fees. For those who need to pick up the pieces following a divorce and determine how they will be able to support themselves on a single income, bankruptcy may be necessary to address the debts that arose during their marriage or after their separation.

Contact Our San Antonio Bankruptcy and Debt Relief Lawyer

If you are struggling with debts, you deserve a fresh start, and you should not let the negative perceptions of bankruptcy stop you from pursuing financial relief. No matter the reasons why you are experiencing financial difficulties, the Law Offices of Chance M. McGhee can help you determine your options, and we will advise you on the best steps to take to eliminate your debts. Contact our Boerne bankruptcy attorney today by calling 210-342-3400 and setting up a free, confidential consultation.

Sources:

https://www.investopedia.com/financial-edge/0310/top-5-reasons-people-go-bankrupt.aspx