In a perfect world, all of us would be able to pay our bills in a timely manner and there would be no need for personal bankruptcy. In the real world, however, people do have to file for protection under bankruptcy law. While some believe that lack of financial planning is to blame for bankruptcy, in reality there are many reasons why people go bankrupt.
According to several sources, here are the top reasons people file for bankruptcy:
- Medical bills. Unpaid medical bills are the number one cause of bankruptcy, according to a Harvard University study. Those without health insurance can easily accumulate hundreds of thousands of dollars in medical expenses with a serious illness or accident, and even the insured can suffer serious financial difficulty with high deductibles and co-pays.
- Job loss. The loss of a job can be devastating for an individual or a family. Even when the laid off worker is fortunate enough to find another job quickly, he or she may be making much less than before. This means that those with high income-to-debt ratios may struggle to pay their bills.
- Poor use of credit. Credit cards are easy to acquire and tempting to use. It is simple to buy things on credit, but it is much more difficult to pay those debts off. This is particularly true for high-interest credit cards that pull the debtor into a spiral of unpayable bills.
- Divorce is a leading reason for bankruptcy. Many couples simply cannot live the same lifestyle without two incomes. Settlements between partners may clean out savings, home equity and other assets, and child support and alimony payments may be impossible to manage.
- Many people do not plan for emergencies; in fact, fewer people than ever have any savings at all. Without an emergency fund, even a minor setback can have serious financial consequences.
If you are struggling to pay your bills, bankruptcy may be the answer. While not everyone’s situation is suitable for bankruptcy, it pays to learn your options and determine the best choice for you and your family.
The experienced bankruptcy attorneys at Oswalt Law Group in Phoenix can help. With years of background in counseling bankruptcy clients, the attorneys at Oswalt Law Group understand a wide range of financial situations and can help clients determine the best course of action for their particular needs. Call today for a consultation about your bankruptcy case.