Why people file for bankruptcy

On Behalf of | Jan 28, 2022 | Bankruptcy

Filing for bankruptcy used to be something viewed as a last resort. There was a negative stigma surrounding bankruptcy, with many people incorrectly assuming that bankruptcy was the result of poor financial choices by people who could not manage their money.

These ideas are fallacies, as evidenced by the growing number of bankruptcy cases filed in the United States in recent years. The reality is that there are many reasons people file for bankruptcy.

Common reasons for a bankruptcy filing

Medical debt is one of the biggest reasons for a bankruptcy filing. Almost everyone has experienced the shock of getting a medical bill that is much higher than anticipated. An accident or injury can occur in an instant, but the medical bills can quickly pile up, causing even the most financially stable people to find themselves buried in unmanageable debt.

Losing a job with little to no notice is another common reason people file for bankruptcy. People lose jobs for reasons that have nothing to do with their job performance, such as layoffs or their employer going out of business.

After a job loss, even people with money saved up often do not have enough to keep their bills paid for very long. They may resort to using credit cards to pay for monthly bills and basic necessities, quickly spiraling them into debt.

People staying in marriages for financial reasons is not uncommon, as a divorce or legal separation often triggers bankruptcy, as well. Financial stability can often be maintained with two incomes but not one. New expenses after a divorce, from things such as day care or alimony payments, can financially devastate someone.

The loss of a home or property due to a natural disaster such as a fire, flood or earthquake is another reason people file for bankruptcy. Although most people have house insurance, separate insurance for certain types of disasters is typically required for reimbursement. Without it, people may suddenly find themselves lacking shelter and struggling to rebuild their lives.

Bankruptcy may be the answer for New Jersey residents experiencing these or other types of issues. There are many advantages to bankruptcy, particularly the chance to make a fresh start. Speaking with a bankruptcy attorney who can assess your situation is an important first step.

 

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