There are many people who struggle to even think about filing for bankruptcy. Instead, they think that they have an obligation to pay off their debts. They believe that the bankruptcy is their own fault, and so they’re hesitant to take that step.
In many cases, though, this is just a misconception of how bankruptcy works and why it happens. It’s very likely that the bankruptcy is not your fault. It had nothing to do with your own financial decisions. While there are some issues with overspending and things of this nature, when you look at the top reasons that people end up filing, you’ll see that their financial situation may seem largely out of their control.
Significant medical expenses
For example, medical expenses are often listed in bankruptcy filings. But if someone needs emergency medical care, they have no say in whether or not that care is necessary. If their insurance refuses to cover it, they may find that there’s no way for them to pay back the debt. A health crisis could leave someone millions of dollars in debt—an amount that they’re never going to be able to earn on their own.
Losing a job
Another one of the top reasons for bankruptcy is job loss. For instance, maybe a business isn’t stable because there’s a new competitor who moved into the area, and so the business simply isn’t as profitable as it used to be. Someone’s boss decides that they have to perform layoffs, and that person is suddenly unemployed. They had a mortgage, car loans and other financial obligations that made sense while they were employed, but through no fault of their own, those debts are now unaffordable.
These are just a few examples of why bankruptcy could happen, but it’s crucial that you understand all the legal options you have at your disposal.
