Bankruptcy is often seen as a last resort for getting out of mountains of unmanageable debt.
However, it’s more common than you may think. Throughout 2013 alone, approximately 1,071,932 people chose to file the Chapter 7, Chapter 11 or Chapter 13 bankruptcy timelines. Chapter 7 bankruptcies are by far the most common, with 728,833 of these bankruptcies filed that year.
But what are the most common causes behind getting help with filing bankruptcy and ultimately filing Chapter 7 bankruptcy? What situations leave people with no other choice but to legally discharge all their debts? To learn more about why people file bankruptcy, check out this list of the top three leading factors behind Chapter 7 bankruptcies in the U.S.
Unplanned medical expenses
Believe it or not, but the shockingly high cost of seeking medical treatment is the biggest factor that drives Americans into bankruptcy. 62% of all bankruptcies filed stem from an inability to pay one’s medical bills. Because serious illness and injury is impossible to predict, it’s almost impossible to plan or save up for these costs — even if you have health insurance.
Loss of employment
The second most common cause of bankruptcy? Being fired or laid off from one’s job. About 22% of personal bankruptcies are filed due to this loss of steady income, which makes it impossible to pay one’s bills on time or at all. For people who have become unexpectedly unemployed, a bankruptcy is often the only option available to get back on one’s feet.
A mere 15% of bankruptcies are filed because the filer was unable to control his or her spending. By maxing out one’s credit cards and opening up more credit cards to pay off existing debts, it’s easy to find oneself in an ever-deepening hole of debt. However, a bankruptcy can be the wake-up call many people need to turn their finances around.
Have any other questions for us about seeking out bankruptcy help from a Chapter 7 bankruptcy attorney? Feel free to ask by leaving a comment below. Read more about this topic at this link.