The Top Four Causes of Bankruptcy and What You Can Do About Them

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Financial strain is an all too familiar feeling for working families across America. Each year, more than one million households file for bankruptcy and many people are looking at a choice of bankruptcy lawyers while feeling overwhelmed. Luckily, you can educating yourself by reading about the causes of bankruptcy and how to take steps to avoid them. When your options of avoiding bankruptcy are exhausted, your next option is to look into a choice of bankruptcy lawyers.

Medical Expenses

In 2014, around 50% of all those who filed for bankruptcy had serious health issues. Medical expenses are the top cause of bankruptcy in the United States. Fortunately, the Affordable Care Act (ACA) now enforces the coverage of pre-existing conditions by insurance companies, and under it many states have expanded Medicaid. Looking into these options can help you lessen the burden in the event of a medical emergency.

Job Loss

Nearly two-thirds of people who filed for bankruptcy in 2014 had recently lost their jobs. Once the paychecks stop coming, most households barely have enough savings to cover essential expenses for more than a couple of months, much less to purchase any extras. If you’ve recently lost your job, it is important to look into the different types of government assistance available to you and your family. These programs, such as unemployment, are meant to help working people stave off financial ruin.

Divorce

Out of all of these, divorce is likely the hardest to prepare for because of joint finances, property and child custody. Whether your marriage is happy or not, it is important to keep on top of your finances and be an active participant in your financial partnership, as well as cultivating the ability to have open, honest discussion about tough financial decisions. In other word, don’t just let the partner who is better with money pay the bills.

Surprise Circumstances

Life is unpredictable. Earthquakes, tornadoes, fires, and floods can effect anyone, rich or poor and wipe out your assets. These are the exact kind of circumstances that call for an emergency fund. If possible, set aside a little from each paycheck to save up for a rainy day. If you’re making enough, establish an emergency fund immediately and set aside generous amounts.

The silver lining is that most of these are debts can be taken care of with bankruptcy. In a way it’s fortunate filing for bankruptcy can leave you with a clean slate when you become overwhelmed. An important aspect of smooth bankruptcy is making the right choice of bankruptcy lawyers. It may seem daunting to begin the process of filing for bankruptcy, but the with the right research and people on your side, you can do what’s best for you and your family.

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