Top 10 Reasons People File for Bankruptcy

The number of people filing for chapter 7 bankruptcy across the United States has risen at a drastic rate.  According to statistics, approximately 1.5 million people file for bankruptcy every year, and 97% of those filings are individuals.  Ohio has the tenth highest personal bankruptcy rate in the country.  Here are 10 of the most common reasons that so many people go bankrupt.

Medical Expenses

Medical expenses add up quick, and often times, many patients find that they just cannot pay them. In fact, medical expenses are among the very top reasons for filing bankruptcy. What’s interesting is that not all of those who filed for chapter 7 bankruptcy, citing medical expenses, were those without insurance. Approximately 72% of this group had some form of medical insurance.

Pay Cuts

If a company is not thriving, it often leads to cutting costs, which can sometimes include employee pay cuts. If you cannot find other ways to make up for the lost income, your only option may be to file bankruptcy.

Loss of Employment

When you lose your job, your savings quickly disappear. On top of having to pay for the essentials you already need, losing your job also incurs extra expenses, such as COBRA insurance. And with the way that the job market has been recently, there’s no way to know where, and when, you can get new employment.

Credit Cards

Contrary to popular belief, not all credit card debt is due to a lack of responsibility with your money. If you are experiencing hardships, and cannot afford to use the money in your bank account to pay for what you need (food, essentials, medical expenses, other emergencies), you turn to your next alternative, the credit card. Accumulating debt, along with painfully high interest rates, can quickly force you to a bankruptcy lawyer.

Overspending

And sometimes crippling debt can be incurred as a result of overspending. Whether it’s a result of inflation and poor budgeting skills, or simply because you neglect to pay attention to what you spend, it can still send you crashing down unbelievably fast.

Emergencies

While it’s recommended to have a few months’ worth of salary saved up in the event of an unexpected emergency, not everyone can afford to save. And emergencies can happen at any time. An appliance in your home could go out, your car could break down, structural damage may be inflicted upon your home. Whatever the reason, even if you have an emergency fund stashed away, these emergencies can have catastrophic financial consequences.

Student Loans

You spent years getting a college education, with the belief that you would be able to find a good paying job right after graduation. Unfortunately, the job market is saturated, and everyone with a college degree now has to pay back those exorbitant student loans. Approximately 1% of all bankruptcies, 15,000 cases, are due to the inability to pay back what was borrowed.

Home Utilities

You need heat, air conditioning, lights, electricity and water in your home; these are basic utilities. However, the costs for these basic utilities is on the rise, and homeowners can no longer afford them, along with other essentials such as food and clothing. An inability to pay for your utilities may have you seeking out the services of a bankruptcy attorney rather quickly.

Foreclosure

An inability to pay the mortgage often results in a foreclosure. Rather than face losing a home, potentially putting themselves and their families on the street, people turn to bankruptcy. Just over 1% of bankruptcies are done to avoid foreclosure.

Divorce

Divorce is an expensive process, even before you factor in the cost of divorce lawyers. Not only do emotions run high, one, or both, of you may experience significant financial losses. And if you have joint accounts, you may be responsible for taking on a portion of your ex-partner’s debt. Straddled with your debts, as well as theirs, filing chapter 7 bankruptcy may be the only way to settle them.

Filing for chapter 7 bankruptcy allows you to liquidate your assets and get a fresh start. But ever since the 2005 bankruptcy code changes, it has become excruciatingly difficult for Akron and Wooster, and all other residents of northeastern Ohio to do so. Don’t fall prey to the DIY bankruptcy kits. You want an experienced bankruptcy lawyer by your side. For the best bankruptcy attorneys that Akron and Wooster, Ohio has to offer, go to the Law Firm of James F. Hausen of Hausen Law, LLC, the Northeast Bankruptcy Attorneys.