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.