Hence, why is it that people become bankrupt? There are many reasons. Let’s take a look at a few.
Medical Expenses
Recent Harvard University researchers found that approximately 62 percent (62%) of US personal bankruptcies are due to medical expenses. The study found that 72 percent of people who filed for bankruptcy for medical expenses also had some form of insurance. This debunks the myth that the uninsured are immune to financial disasters resulting from medical-related expenses.
Reduction In Income
Many employees see this as a result of companies cutting back on expenses. This can lead to major pay cuts for them and reduced bonuses. Employees can also end up in bankruptcy.
Job Loss
Even if there is substantial severance, job loss can quickly drain one’s savings or assets. Additional expenses like COBRA insurance can be added to job loss. There’s also no way to know when a new job might become available.
Credit Debt
Credit debt is not just the result of reckless spending. Credit debt can also build up from unexpected income loss, illness, disability, job loss, and other financial crises. These are some great tips to help you reduce your credit card debt and avoid bankruptcy.
Divorce
Even if you don’t include the fees of lawyers, divorce can be a very expensive business. Separation and divorce can result in significant income loss and asset losses for both of the partners. If you have co-signed or opened joint bank accounts with your partner, it may mean that you will take on some of their debts.
Unexpected Expenses
Emergencies are always around the corner. Savings that were built up over years can be quickly wiped out by one of these events.
Student Loans
You’re not the only one who hasn’t yet paid off your student loan. According to statistics, student loans account in excess of 1% of all U.S. bankruptcies. That’s roughly 15,000 bankruptcies per year.
Utility Payments
Many homeowners today are facing rising heating, air conditioning, and electric light costs that can lead to bankruptcy.
Foreclosure
Statistics show that more than 1% of Americans must file bankruptcy to avoid losing their home.
Bad Budgeting/Overspending
Inflation has made managing money more difficult than ever. Bad budgeting combined with uncontrolled spending can lead to bankruptcy and skyrocketing interest rates. These are some ways to make your budget healthy.
Some people find bankruptcy a reasonable debt solution. Others have discovered that consolidating their debts can save them the hassle and expense of bankruptcy while still allowing them to take control of their finances. Whatever method you choose, it is important to address the problem as soon as possible. Debt is a problem that will not go away on its own.
This post was written by Trey Wright, one of the best bankruptcy Tallahassee attorneys! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.
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