5 Most Common Causes of Bankruptcy
Filing for bankruptcy is a financial situation that a number of people deal with from time to time.
While this filing has a bit of a stigma, it's important to remember that real-life scenarios are often the root cause. If you want to see the most common reasons that people go bankrupt, consider these points.
1. Overwhelming Medical Bills
If you've been paying attention to the news the past several years, it's clear that medical costs can be overwhelming.
When bills pile up, it can be next to impossible to climb out of a hole without a gameplan. For many people, this gameplan boils down to filing for Chapter 7 or Chapter 13 bankruptcy in order to find some relief.
2. Loss of Employment
Whether you get fired, laid off or your company goes under, a loss of employment can create serious problems in your financial life.
During this shortfall, your bills are still coming, and they can sometimes lead to a mountain of debt. If this happens, bankruptcy is sometimes the best option to explore.
3. Running Up Credit Cards
Right now, the average person has credit card debt greater than $6,000, so you might imagine that this can be problematic for your finances.
The problem with credit cards is that in addition to the balance, the interest keeps coming as well. When you need to crawl out of this hole, credit counseling and bankruptcy can sometimes be the only decision.
4. Financial Trouble After a Divorce
Divorce does more than just create turmoil in your emotional life.
In fact, it is also one of the leading reasons that people file for bankruptcy. When you split your assets in a divorce, it can get fuzzy, and you might end up taking on debt that isn't yours.
What's more, the cost of legal assistance alone in a divorce case cause problems in your financial life. These legal bills pile up and you may need some relief.
5. Excess Student Loan Debt
On average, people today are graduating with about $30,000 in student loan debt.
Having this kind of debt when you're in your early 20's can be perilous and get you off on the wrong foot. Since these interest rates will only keep compiling, you will also end up owing more money in the long run.
If you happen to go after a Master's degree or doctorate, this will also leave you with a mountain of debt that can be difficult to overcome.
Many people going through the bankruptcy process look into discharging their student loans. This is possible when you are able to prove that the loans create undue hardship in your life.
Be sure that you lay out your income and other variables when filing so that you can apply to have your student loans discharged.
Get the Bankruptcy Help That You Need
Make sure that you get the legal forms online that you need whenever you are dealing with a bankruptcy situation. This is a fact of life that you might be dealing with, and you should take relief in the fact that you have help on your side.
When you need this sort of help, there are several legal forms you can get your hands on that can assist you. Be sure that do your research in advance.
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