When some Americans hear that another person has filed for bankruptcy, they initially think that it has to do with that individual’s inability to manage their finances. While this may be the reason that some individuals ultimately have to file, unexpected life changes most often result in bankruptcy filings.
Job loss
One of the top reasons that individuals may ultimately have to file for bankruptcy is if they lose their job and are unable to find work for an extended period of time.
During the 2008 recession, many companies ended up having to lay off workers. Many individuals depleted their savings simply trying to remain afloat. After months of not paying their creditors, many had to file for bankruptcy to stop debt collection efforts.
Medical debt
Another common reason that individuals file bankruptcy is because they get sick. In fact, researchers at Harvard University recently found that at least 62 percent of all bankruptcies are filed because of medical debt.
An increase in the use of technology in the medical field in recent years has led doctors and hospitals to increase their prices to be able to afford it.
Individuals often don’t purchase health insurance because premiums are too high. They can be left with crippling bills because of this.
Divorce
Another reason that individuals file for bankruptcy is because they get divorced. They may do this because a spouse racked up debt without their knowledge. They may not have realized that they’d be responsible for it if they got divorced.
Then there’s the mortgage. Both parties may have been comfortable jointly paying, but it may be too expensive for one party to pay on their own. If that’s the case, then a divorcing spouse may feel that they have no other option but to file bankruptcy to get out from under the note.
While filing for bankruptcy will stop creditor harassment, it greatly impacts your credit score. This can impact your ability to rent or purchase certain items. You may be able to acquire them in time if you start rebuilding your credit score. In learning more about the types of debt that you have, an Alexandra personal bankruptcy attorney can advise you whether bankruptcy or some other alternative may be an ideal solution for you.