Bankruptcy is shrouded in mystery for most Americans who only know it as a way to get rid of huge amounts of debt. There are many myths that surrounded it, and one of the most prevalent myths is that it is only for people who can’t manage their money and overspent too much, too often. In reality, there are so many reasons a person may need to file for bankruptcy, and most of them involve situations that can happen to literally anyone.
Here are some of the top reasons people file for bankruptcy:
- Medical bills: It is estimated that more than 60% of all personal bankruptcies are created because of overbearing medical expenses. A serious injury that causes lifelong damage may cost hundreds of thousands of dollars to address, and not many people have that lying around their coffers. Additionally, about 4 out of 5 people who file for bankruptcy due to medical costs had some type of health insurance coverage, meaning the uninsured are not the only people who can’t afford treatment.
- Unemployment: Severance packages are getting rarer and living paycheck-to-paycheck is essentially a middle-class norm. If anything happens to cause unexpected or abrupt job loss, such as termination, layoffs, etc., bills stack up fast. Most Americans rely on their jobs for different types of insurance, as well, meaning they suddenly have no support on that front, either.
- Credit card debt: Overspending is a real problem for some people who mistake their line of credit as a safety net. Borrowing to the point of being unable to meet minimum payments each month is a surefire way to fall into debt and need bankruptcy to get out.
- Divorce: Splitting the finances of one household into two is understandably difficult and can leave both spouses feeling strapped for cash after a divorce. Sometimes marital dissolutions become a major financial strain even before they finalize due to legal fees. Don’t forget that child support and alimony payments can also significantly decrease a person’s income.
- Disaster: Much like how medical bills can become a burden due to an unexpected injury or illness, repair or replacement costs can be enormous after an unexpected natural disaster. People without adequate disaster insurance coverage may have no choice but to file for bankruptcy after their home or property was severely damaged.
For more information regarding bankruptcy and the usual reasons people file for it, you can contact Belsky, Weinberg & Horowitz LLC. Our Baltimore bankruptcy attorneys are passionate about finding people the right financial solutions for their case, each one being personally-tailored for their unique situation. We are also known for being compassionate, stressing the importance in understanding that bankruptcy is an honest solution for people of all walks of life. Get in touch with us today to learn more.