5 Reasons Why People File Bankruptcy
If you ask a room full of people what they want to talk about, it is unlikely any of them will say their personal bankruptcy story. The truth is, there is a lot of stigma associated with being in debt. Even though filing is a legal right granted to all consumers in the United States, many people view bankruptcy with shame. Regardless of what leads someone to call a bankruptcy Everett WA lawyer, the process can be difficult to go through. Because of this, it is important to know you are not alone. In 2019, more than 733,000 consumers filed. Here are the main reasons why.
1. Medical Costs
Getting sick can be financially devastating. With the increasing cost of healthcare in the U.S., it may come as little surprise that excessive medical expenses account for over 66% of consumer bankruptcies.
2. Job Loss
Another common reason people file is due to loss of work. When someone unexpectedly loses their source of income, bills can quickly pile up.
3. Poor or Excess Spending
Sometimes, bankruptcy comes down to a person’s checkbook. Indeed, poor budgeting skills are another cause of consumer bankruptcies.
4. Divorce or Separation
When two people separate, through divorce or otherwise, it often creates an obvious (and sometimes painful) division of resources. At the same time, credit card bills and other debts may not change, so people end up needing financial relief.
5. Unexpected Costs
Although the first four reasons on this list cover most bankruptcies, no two situations are the same. Most of the time, financial struggles result from unexpected scenarios, but unplanned expenses do not stop at healthcare and job loss. Sometimes, other types of unexpected bills can also have a large role in creating unmanageable debt.
Many people end up filing for bankruptcy for many reasons. No reason is better or worse than any other, but all reasons lead to a consumer facing financial difficulties. The good news is, U.S. law provides Chapter 7 and Chapter 13 bankruptcy options as solutions for people who may be facing any of items on this list.