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Top 5 reasons why people go bankrupt

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The economic uncertainty that Americans are experiencing nowadays has caused a considerable increase in bankruptcy filings in recent years. Furthermore, the quarantine imposed by the COVID-19 pandemic will likely only exacerbate bankruptcy filings over the next few years, as stimuli cease. However, even in the face of this harsh reality, a lot of people still believe that the only reason why many are declaring bankruptcy is because of poor financial management or overspending.

The same people who believe that may believe that bankruptcy is a completely negative process that will cause you to lose all your assets. As you may know, nothing could be further from the truth. The reality is that if you’re drowning in debt, bankruptcy is a process that can give you a chance for a clean financial start. With that in mind, here are the main reasons why millions of Americans file for bankruptcy every year.

If you’re thinking about bankruptcy to get rid of your debts, you should consider working with an experienced local bankruptcy attorney huntington beach who is always available to you, and KT Bankruptcy Lawyer is kevin tang and associates may be just what you need. This law firm strives to satisfy the needs of each of its clients to help them get a fresh financial start, so they may be your ideal choice.  

Medical Bills

According to a study published by the American Journal of Public Health, 66.5% of bankruptcy filings in 2019 in the United States were caused by issues related to medical expenses.

Dealing with high medical bills resulting from an injury or illness can destroy anyone’s finances. It can force them to burn through their savings to deal with their condition, making bankruptcy their only shelter to free themselves from accumulated debt.

Job loss

If you lose your job, whether, through layoff, termination, or resignation, the effect of losing a steady source of income can be devastating to your finances. Some people are fortunate enough to receive a severance package, but that’s usually not the case.

When you become unemployed, you are likely to spend your savings in a short time and be forced to take on more and more debt to sustain yourself, which can lead to a bankruptcy filing.

This is increasingly common because quarantine has forced many employers to lay off many of their workers to cut costs during the pandemic.

Foreclosure

One of the advantages of bankruptcy is that it can help you save one of your most precious assets: your home. If your creditor is about to foreclose on your house, you can use bankruptcy to stop this process.

Once you file bankruptcy, your creditors are forced to stop any action to collect your debts, including foreclosure. Keep in mind that a Chapter 7 bankruptcy will stop the process temporarily, and a Chapter 13 bankruptcy will give you a chance to catch up on your mortgage payments.

Divorce

Divorces are another noteworthy cause of bankruptcy. A marital separation often involves astronomical legal costs, which can easily destroy the finances of both parties. Moreover, when combined with the division of marital assets, child support, alimony, and other expenses involved in the process, it can easily force one of the partners to file for bankruptcy to relieve the financial pressure and emotional stress caused by the break-up.

Emergency Expenses

If you lose some of your property due to an unexpected event, such as theft, an accident, or a natural disaster, your finances may be wiped out by replacing said property, which may force you to resort to bankruptcy to relieve your debts.

If you’re considering bankruptcy, talk to an attorney!

No matter your circumstances, if you believe that bankruptcy is what you need to get a fresh financial start, the first thing you should do is contact a bankruptcy attorney in Huntington Beach to guide you every step of the way to a fresh financial start.

The team at KT Bankruptcy Lawyer is ready to help you with anything you need. You can contact them now for a free initial consultation.

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