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The 3 Most Common Reasons Why People Decide to File Bankruptcy

There are a number of legitimate and understandable reasons why individuals decide that they should file for bankruptcy. However, the truth is that a lot of people still depend on family and friends when it comes to finance advice.

Bankruptcy is primarily designed to give people a fresh start from financial troubles. So what are the three most common reasons why people seek that new start?

Keep reading to find out.

1.They lost their job

This is probably a pretty obvious reason, but that doesn’t change the fact that most people think that people declare bankruptcy just because they have spent far beyond their means. The actual facts surrounding bankruptcy show a very different picture, however.

The most common reason that people file for bankruptcy is job loss. Often, job loss leads to households not being able to cover debts or come up with the money necessary to pay for their mortgage. It’s in those moments that bankruptcy becomes a helpful – if not sometimes necessary – option.

If you are thinking about declaring bankruptcy, bankruptcy lawyer, bankruptcy attorney may be someone to reach out to get the facts.

2. You or a loved one has been dealing with a medical problem

Health insurance is an incredibly complicated, frustrating and potentially very costly endeavor. If you or someone you love is dealing with a medical situation that is not covered or treated as a “pre-existing condition,” it could very likely cost you tens – or even hundreds – of thousands of dollars.

When these unlucky incidents occur, it is quite common for people drowning in debt as a result to seek out bankruptcy as a way to try to recover from a life-threatening injury or illness. 

3. Divorce

Hopefully you don’t have first-person experience with this, but you don’t have to in order to know what divorce and separation can be incredibly expensive. That’s especially true if one of the partner’s in the relationship is being weighed down by a mountain of debt. That debt, paired with the expensive costs of divorce and separation can quickly become completely unmanageable.

With that in mind, it is good to know that there is some kind of option available to those who are trying to find a healthier and happier way to live by ending a toxic relationship. Bankruptcy allows people to try to start anew in more ways than one.

Bankruptcy is seen by any as some kind of moral failure. Those who simply can’t afford the kind of life they want use it as a get-out-of-jail card. The truth is, that is very far from the truth. Only 13 percent of debtors who file for bankruptcy because of credit card overspending or bad investments.

The truth is, the vast majority of those who file for bankruptcy are dealing with one of the aforementioned three instances. If you are struggling with one of them, you may want to contact a professional and see if declaring bankruptcy could be a good avenue for you to pursue.

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