A misconception in regards to why people file for bankruptcy is because they have been irresponsible with their money. There are situations in which people can accumulate debt due to expensive vacations and a rich lifestyle catching up with them. However, the main reasons that many people file for bankruptcy may shock you. Some of the main reasons that people head to bankruptcy court often come out of necessity or unfortunate situations outside their control.
Medical Bills Represent the Main Reason the File for Bankruptcy
In the United States, two thirds of individuals that file for bankruptcy often do so because of a large medical bill. Medical bills can often force people away from work as well as quickly depress a person’s income. Sick individuals that have a lengthy hospital stay often incur a massive amount of debt that can take years to pay off. Choosing to file for bankruptcy can often be better for one’s future credit rating and more.
Unaffordable mortgages are also a leading cause for filing for bankruptcy protection. The housing market in the United States regularly rises and falls and many people have found themselves in a mortgage which is too high and are facing difficulty when it comes to payments on their home.
Other key drivers for bankruptcy include student loans as well as divorce and separation. When student loans grow out of control or when a person faces a substantial drop in income due to a divorce, bankruptcy protection may need to be introduced in order to protect their finances.
Rather than having a negative connotation to bankruptcy or feeling as though people have simply been careless with their money, it’s important to look towards the main causes of bankruptcy when we look at the nature of the situation as society.
This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee! Trey is one of the founding partners of https://brunerwright.com/, which specializes in areas related to bankruptcy law, estate planning, and business litigation.
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