Bankruptcy no longer has the social stigma it once did. However, those who are considering bankruptcy may take comfort in knowing what has caused others to seek financial relief through this legal process. Although reasons for financial struggles vary from family to family, three of the most common causes of bankruptcy that are often cited by those petitioning for relief from the court include:
- Medical debt. Whether you have health insurance or not, a medical emergency can quickly lead to insurmountable debt. Even those with insurance can find high deductibles unmanageable. As a result, medical debt is the most common cause for bankruptcy.
- Unemployment. It is simply impossible to make ends meet without an income. Job opportunities can be scarce, and many families continue to struggle to find adequate employment.
- Divorce. The end of a marriage is also the end of a financial partnership. In many cases, the income relied upon by the family has not changed, but the financial needs often double as the family shifts from one household to two.
A recent publication in the Chicago Tribune notes that these three factors contribute to almost 90 percent of all bankruptcy petitions within the United States.
Is bankruptcy right for me? The decision to go into bankruptcy is not an easy one. Those who are struggling financially are wise to take three different questions into account when attempting to determine if bankruptcy is right for their family. First, how much of an income or savings is at your disposal? Second, how much do you owe? Third, how much do you own in assets (home, car, business interests)?
Gather this information together and seek legal counsel. An attorney experienced in bankruptcy matters will be able to answer your questions. Questions like what can you keep in bankruptcy and how will life look after the bankruptcy process is complete.