With so many Americans forced to live paycheck to paycheck, it’s no wonder that even a small financial emergency can lead to potential ruin. As debt continues to mount, savings continue to crumble. Honest, hardworking individuals often find themselves scrambling to make ends meet … sacrificing one bill to have enough money to pay another. What happens when it all becomes too overwhelming?
Fortunately, the Bankruptcy Code exists to give people a fresh start. Based on personal factors, people can elect to file Chapter 7 or Chapter 13 bankruptcy, but the elements that ultimately lead to financial peril are quite common. Here are five reasons why bankruptcy might become a necessity.
- Medical expenses: Many studies have shown that well over half of all bankruptcies are related, at least in part, to medical debt. Even with strong health insurance, many individuals are forced to pay high deductibles and a large percentage of an enormous total bill.
- Job loss: Whether due to layoff, termination or resignation, the loss of income can ultimately be a sudden and jarring change. Even those who were lucky enough to receive a severance package might find it a challenge to recover.
- Excessive reliance on credit: Even in the face of financial difficulty, some individuals find it challenging to curb their spending. Relying on credit can mean credit cards, personal loans, car loans or a home mortgage can only end up causing more harm.
- Divorce: Even if the dissolution of a marriage is the best solution for your future, dividing a house’s finances into two can lead to turmoil. Suddenly, each individual has lost half of their buying power and debt continues to mount.
- Unexpected expenses: Outside of medical emergencies, job loss and divorce, individuals might face unexpected home repairs or even loss of property due to theft. Additionally, unexpected expenses might simply refer to hidden costs such as exorbitant fees.
Every situation is different and it wise to discuss your specific concerns with a bankruptcy attorney as soon as possible. Once a financial avalanche begins, it can be hard to recover. Bankruptcy can prevent creditor harassment, wage garnishment, bank account levies, repossession or foreclosure. Don’t hesitate to take control of your finances.