What are the reasons individuals file bankruptcy?

More than a million Americans file bankruptcy every year, according to bankruptcy court statistics in the United States. Bankruptcy can help individuals struggling with debt by discharging or eliminating certain debts and helping them get a fresh start.

Individuals struggle with debt for many different reasons. Even though bankruptcy can carry a stigma, you should know that bankruptcy can truly help you get a fresh start and make a significant impact on the rest of your life. 

Consumers struggle with debt for a variety of reasons. What are the most common reasons for bankruptcy among individuals? Listed below are the main causes of bankruptcy:

  • Medical debt accounts for roughly 62 percent of personal bankruptcies, and many of these people had health insurance. 
  • Credit card debt can be caused by many things, including emergencies and medical conditions or disabilities.
  • Job loss leads to reduced income and depletion of your savings. 
  • Reduced income can lead to increased credit card debt that is difficult to pay back. 
  • Divorce can lead to a loss of income and assets.
  • Foreclosure has become quite common in the country, and bankruptcy can stop the foreclosure process. 
  • Student loans can lead to other types of debt due to paying student loans with high interest rates. 

Financial obligations can lead to serious debt, and many consumers do not know what to do to make things better. If you are struggling with debt, filing for bankruptcy might be right for you. In order to file for Chapter 7 or Chapter 13 bankruptcy, individuals have to meet strict eligibility requirements. Working with a bankruptcy attorney can go a long way in making sure all of your options are explored. 

Source: The Huffington Post, “Top 10 Reasons People Go Bankrupt,” March 24, 2015

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