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3 reasons that upstanding people wind up filing bankruptcy

On Behalf of | Apr 2, 2021 | Bankruptcy | 0 comments

Some people believe that bankruptcy is evidence of some kind of personal failing. While it is true that some people overextend themselves by making bad credit decisions, most people who file for bankruptcy have generally lived law-abiding, fiscally responsible lives. They never dreamed that they would need to leave a debt unpaid when they originally incurred those debts.

Sometimes, unusual life situations can force people to make difficult decisions. If you have always paid your bills and debts, the idea of filing bankruptcy might upset you. However, plenty of responsible, hardworking adults discover they need bankruptcy through no fault of their own. Three of the five most common reasons that people file for bankruptcy are out of their control.

They have a major medical issue

Cancer treatment or inpatient hospital care after a traumatic injury could cost hundreds of thousands of dollars. Even those with good insurance may need treatment not approved by their insurance provider or care while out-of-network, meaning that they wind up with massive levels of debt.

They lose their jobs unexpectedly

Economic downturns, poor business management and corporate greed are all factors that individual workers have no control over. Those are all also reasons that many Americans lose their jobs unexpectedly.

Those laid off or fired will have to cope with drastically reduced income, which might mean that they take on debt or use credit cards to pay household expenses. Other times, they already have debt and can no longer make payments on it, leading to aggressive creditor behavior.

Their spouse decides to file for divorce

Divorcing isn’t just emotionally painful. It can also be devastating financially. You may have thousands of dollars in costs to pay, on top of splitting every savings account and major asset you own. When you go through a divorce, you may have few options to regain control over your finances other than bankruptcy to eliminate debts.

Regardless of why someone finds themselves struggling to cover all of their financial obligations, no one should have to live their lives terrified of creditor actions. Bankruptcy immediately protects you from collection efforts like foreclosure, vehicle repossession and creditor lawsuits. If successful, your bankruptcy proceedings might allow you to renegotiate some of your debts and liquidate others.