Over the last few decades, America has seen a significant increase in the number of consumers struggling with debt. Many Americans are turning to bankruptcy to achieve a fresh start with their finances. Below is a list of the top five causes of bankruptcy in America today.
1. Medical Expenses.
An unexpected illness or injury can easily turn into hundreds of thousands of dollars in medical bills. Medical debt can quickly drain savings accounts, retirement or college education funds, even home equity.
According to a Harvard University study, the leading cause of bankruptcy is medical debt. It represents 62% of all personal bankruptcies. The study also showed that 78% of filers carried some form of health insurance, which debunks the myth that medical debt only burdens the uninsured.
2. Job Loss.
A layoff or job termination can cause a loss of income that can be financially devastating. For many Americans, they may experience a job loss without the cushion of savings or a severance package, which leaves little room for security.
3. Poor Use of Credit.
Credit card debt can easily spiral out of control, where even making the minimum payment becomes a challenge. Statistics show that many debt consolidation plans fail, only delaying an inevitable bankruptcy filing. Utilizing home-equity loans or other loans to solve immediate financial problems can be risky and result in more debt and even foreclosure.
4. Divorce/ Separation.
These life changes are not only emotionally draining but also financially draining. Dividing marital assets, the loss of two incomes, paying child support, alimony, and legal fees often force many Americans into bankruptcy.
5. Unexpected Expenses.
Loss of property due to theft, an unexpected casualty, or a natural disaster can result in tremendous financial distress. Many homeowners may be unaware that additional coverage might be necessary to protect their home and valuables from natural disasters like a hurricane, flood or tornado.
If you are in a financial crisis and are considering filing 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, P.A. 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 website at www.miamibankruptcy.com.