Bankruptcy, just the word can make most people feel filled with dread and fear. No one sets out on their adult life, thinking they will have to one day file bankruptcy, because they are broke and can’t manage their bills. However, it is more common than you think and truly nothing to be ashamed of.
You can be old, young, married, single or any nationality and have to file bankruptcy, with the average person filing looking just like you. In the list below, a few of the most common reasons people have to file bankruptcy will be revealed for all too see.
One of the most common causes of filing for bankruptcy is divorce, as a matter of fact it is the third leading cause of bankruptcy in the world today. Divorce is a nasty business, with many hurt feelings on both sides, and money and property having to be divided. Not only do you have to pay legal fees, if you have joint accounts with your ex-spouse, you may very well end up having to pay any bills they have racked up as well. For many couples, the build-up of bills is too much, and one or both end up in bankruptcy court, as well as divorce court when all is said and done.
2. Medical Expenses
The number one cause of bankruptcy is still unpaid medical expenses. The expenses pile up, because people are out of work due to illness and, of course, if you can’t work, you can’t pay your medical bills. It is a vicious cycle, that often ends with the person filing bankruptcy to try and get their head back above water.
3. Loss of Job or Underpaid
If is no secret that many people struggle when it comes to making end meet. Many people have lost their jobs due to the economy and many more don’t get paid enough to get by in a struggling economy. When the economy is bad enough that your pay check is cut in half or completely gone, the bills keep piling up, and many people have no choice but to declare bankruptcy to try and get back ahead.
4. Having No Savings
While everyone knows how important it is to have emergency money put aside in case the unthinkable happens, it’s very seldom in today’s world, that people actually have a savings account. When something happens, if you don’t have a savings to draw from in order to fix the problem, then it has to come out of your regular budget. This in turn, puts you behind on your normal bills, and often leads to people being unable to get caught back up. This is a number one cause of bankruptcy as well.
5. Credit Card Debt
While a credit card is a good thing to have for emergencies, when it gets to the point where you are paying your bills with your credit cards, then you have a problem. If you have to use the emergency credit card every month, in order to pay bills like your lights, other credit cards, and groceries, you are clearly headed down the path to bankruptcy.
6. Debt Consolidation Plans
Many people don’t realize that debt consolidation plans can easily lead to you ending up filing bankruptcy in the end. Studies and statistics have shown that most debt consolidation plans don’t work and basically just delay the inevitable filing of bankruptcy.
These are just a few of the most common reasons people file for bankruptcy today. Whether it’s unpaid medical bills or divorce, there is help out there, if you look in the right place.