While it is commonly assumed that people who file for bankruptcy cannot resist the temptation of using credit cards or are self-proclaimed shopaholics, most people go bankrupt for other reasons. Here are the most common reasons people file for bankruptcy.
- Medical debt. Medical expenses account for approximately 62 percent of personal bankruptcy filings in the U.S., according to a recent Harvard University study. And interestingly enough, the study revealed that 72 percent of those who filed for bankruptcy due to their medical bills had some form of health insurance.
- Reduced income. Companies are cutting back on expenses and for many employees that means pay cuts. Less income, combined with an unexpected expense can end in bankruptcy.
- Job loss. The sudden loss of a job can quickly deplete ones savings. Approximately 62% of Americans have less than $1,000 in savings and 21% live month-to-month.
- Credit card debt. This is not always the result of irresponsible spending, but can accumulate due to an unexpected medical expense, illness or job loss.
- Divorce. This can mean a significant loss of income and assets for both partners. It can also mean taking on a portion of your partner’s debt if you co-signed on a loan during the marriage.
- Unexpected expenses. Emergencies can happen to any one of us, whether your vehicle breaks down, you suffer a debilitating illness or a catastrophic storm damages your home—these events can deplete savings quickly.
- Student loans. Even though these are difficult to discharge in bankruptcy, statistics show that student loans account for at least one percent of all U.S. bankruptcy filings, which translates to approximately 15,000 bankruptcies a year.
- Utility payments. For many homeowners, the rising costs of utilities- such as heating, air conditioning and electricity- can quickly add up and pave the way to bankruptcy.
- Foreclosure. A number of people file for bankruptcy in an effort to save their homes from foreclosure.
- Money mismanagement. Money management has become more difficult, thanks in part to inflation. A combination of poor spending habits and incorrect budgeting can quickly spiral into debt.
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If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.