It’s easy to assume that someone who files for bankruptcy protection has been financially irresponsible, but according to a recent post in the Huffington Post, some of the most common reasons people file for bankruptcy have nothing to do with overspending at all.
Common Reasons for Bankruptcy
When someone gets sick, it throws the finances of the entire household into chaos. High medical bills and treatment costs both impact your finances when a family member is ill – and insurance doesn’t always help. According to statistics from Harvard University, 62 percent of personal bankruptcy filings are related to medical expenses, even though the majority of filers had health insurance.
Pay Cuts or Job Loss
When you have a budget based on a specific income figure, but lose that job or see a reduction in your pay, it rapidly pushes you toward bankruptcy. Whether you’ve lost a job entirely or simply had your hours or wages reduced, it can cause dramatic financial harm in a short amount of time.
South Carolina made headlines this year when thousands of homes were damaged due to record rains and flooding. While some homeowners had insurance, many did not and suffered extreme financial hardship because of it. Whether you’ve experienced a natural disaster, a fire or other emergency, unexpected expenses can lead to bankruptcy.
Separation and Divorce
The process of dissolving a marriage is expensive, and simply disposing of the house can lead to financial hardship for both parties. From the high cost of the process itself to the expenses associated with setting up separate households, divorce drives many couples into bankruptcy.
The High Cost of Credit
While credit is related to spending, high interest rates, fees and other charges can add to the burden felt by someone in financial trouble. Missed payments, over the limit charges and extensive fees can push an individual or couple closer to bankruptcy, even if they are not actually making new purchases with the cards.
Bankruptcy happens for a variety of reasons, but once you file for protection, you’ll be one step closer to a fresh start. Learning more about the reasons for bankruptcy can help you consider all of your options and determine if you need to file for protection without worrying about any social stigma or extra stress. Contact Morgan Lawyers today.