Primary Reasons People File Bankruptcy

author by Josh J. Mitchell on Jun. 20, 2016

Bankruptcy & Debt 

Summary: Primary Reasons People File Bankruptcy

Primary Reasons People File Bankruptcy

 

Loss of Job

 

The loss of income from a job can be devastating. Not having an emergency fund to draw from only worsens the situation, and using credit cards to pay bills can be disastrous. Those who are unable to find similar gainful employment for an extended period of time may not be able to recover from the lack of income in time to keep the creditors at bay.       

 

Injury or Illness

 

With the high cost of medical treatment, illness or injuries can result in thousands of dollars in medical bills. These bills can mount up quickly and wipe out savings and retirement accounts, college education funds and home equity. Bankruptcy may be the only alternative, regardless of whether the patient or his or her family was able to apply health coverage to a portion of the bill or not.

 

Divorce

 

Divorce causes tremendous financial strain on both partners in many ways. The legal fees, which can be astronomical in some cases, followed by a division of marital assets, child support and/or alimony, and the ongoing cost of keeping up two separate households after the split. The legal costs alone are enough to force some to file, while wage garnishments to cover back child support or alimony can strip others of the ability to pay the rest of their bills. Spouses who fail to pay the court ordered support often leave the other completely destitute.

 

Excessive Debt

 

Some people cannot control their spending. High interest credit card, installment debt, car and other loan payments can eventually spiral out of control, until finally the borrower is unable to make even the minimum payment on each type of debt. If the borrower cannot access funds from friends or family or otherwise, then bankruptcy is usually the inevitable alternative.        

 

Unexpected Expenses

 

Loss of property due to theft or casualty, such as fires or tornadoes for which the owner is not insured can force some into bankruptcy. Many homeowners are likely unaware that they must take out separate coverage for certain events such as floods. Those who do not have coverage for this type of casualty can face the loss of not only their homes but most or all of their possessions as well. Not only must they then pay to replace these items, but they must also find immediate food and shelter in the meantime. 


In many of the above situations, bankruptcy is a viable solution. Straight Chapter 7 bankruptcy can eliminate these types of debts in most situations. Chapter 13 might be a better alternative, particularly if a person has certain secured debts such as a car loan and wants to maintain possession of the car while lowering the payment. Contact attorney Josh J. Mitchell with the law firm of Bouloukos, Oglesby and Mitchell to discuss the available options. 

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