Bankruptcy is one of those realities of life that most people don’t really want to talk about. Chances are that you will not have to file for bankruptcy and that you won’t have to learn more about it. However, if you do find yourself in need of this kind of protection, you will be glad that the US has such a robust and somewhat comprehensive bankruptcy system.
And if you think that you’re not irresponsible with your money and that this would never happen to you, you should be aware that there are numerous reasons, some completely out of your control, that could lead to you needing bankruptcy. To learn more, we reached out to bankruptcy attorneys at the Law Offices of Mark L. Miller. They shared this list of common causes for bankruptcy.
Irresponsible Spending
Sure, being bad at managing money is one of the reasons why you might end up needing bankruptcy protection. Whether you never learned proper money management or you simply have trouble sticking to a budget as a new development, racking up debt can only go so far. After a while, your credit card payments might exceed your ability to pay them, and you may fall into serious debt.
If you are unable or unwilling to curb your spending, it could lead you into debt so deep that bankruptcy is your only way out. Luckily, chapter 7 bankruptcy might be able to help you.
Unexpected Expenses
Most people who consider themselves good at managing money might not think about this, but they might be just one unexpected expense away from struggling financially. For example, you might have to unexpectedly pay for car repairs or you may have a medical emergency. If these expenses come at a time when you’re already struggling to make ends meet, it can be impossible to get out from under them. This is especially true if you don’t have savings to cover the unexpected costs.
Even if you’re generally good with money, one large, unexpected expense can put you in a difficult financial position. A lot of times when this happens people find it hard to recover from this which makes bankruptcy a very viable option.
Medical Debt
One of the most common unexpected expenses people find themselves in need of bankruptcy protection for is medical debt. Even with insurance, an unexpected serious illness or injury can quickly lead to tens of thousands of dollars in debt, and sometimes even more.
This is especially true with chronic conditions that require constant medication to manage, such as diabetes or high blood pressure. Medication can be prohibitively expensive, even if your insurance covers some of it. If you also need surgery and have to stay in a hospital for an extended period of time, this only exacerbates the precarious financial situation.
Job Loss or Reduction in Income
If you suddenly lose your job or experience a significant reduction in income, it can be difficult to make ends meet. This is especially true if you have a lot of bills and other financial obligations.
During difficult financial times, most people rely on their savings and when that dries up, credit cards and fast loans seem like the only way out. However, these are not great as your only source of money because the interest rates can soon skyrocket and cause you to sink even further into debt.
Finding yourself in a position to struggle financially may not sound like a pleasant thing to think about, but it can happen. What’s important is that you know that there is a safety net that can help you get back on your feet. With the right bankruptcy attorney, you can be protected and get back on your feet as soon as possible.
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