3 Main Reasons Americans Are Filing Bankruptcy

April 13th, 2021 by dayat Leave a reply »

Many Americans mistakenly assume that people who use bankruptcy lawyers to avoid debts are doing so simply because they’ve had too much fun with their credit cards. However, avoiding credit card debt is actually a very small reason that Americans have for filing bankruptcy. If you’re curious about alternative reasons people are filing bankruptcy, here are three.

#1 Reason For Filing Bankruptcy: Medical Expenses

Medical expenses are the top reason Americans are going bankrupt and it’s expected that nearly 60% of bankruptcies happen because of unavoidable, overwhelming medical debt. Many people mistakenly believe that it’s only those without health insurance who have excessive medical debt, and while the uninsured might be a part of the problem, it isn’t just people without insurance that see bankruptcies as their only option.

One catastrophic illness or injury could cost a patient hundreds of thousands of dollars, which could wipe out a person’s savings account in just a few weeks. Insurance co-pays, co-insurance costs and high deductibles, coupled with a long-term healthcare need means that someone without any additional debt could be struggling to keep up with payments after they’re healthy again.

#2 Reason For Filing: Job Loss

The second main reason Americans are struggling to keep with their debt is the economy. Many people, even those who assumed that they had a steady, stable job, have been saddled with a job loss. In years past, when the economy was on an uptake, it might have been easier to find a replacement job, but now, many people are relying on meager unemployment benefits in order to stay afloat financially. However, these benefits don’t last forever, and some people struggle to find a job before the unemployment benefits stop.

#3 Reason For Filing: Unexpected Expenses Due To Act Of Nature

Yet another reason people are forced to call bankruptcy lawyers is an act of nature. From hurricanes, to tornados, to fires, these acts of nature can cause severe devastation. If you’re not properly insured, you could be forced to pay to rebuild your life entirely by yourself. One way to protect yourself is to contact a qualified insurance agent and go over disaster scenarios for your home and your vehicle. If you’re a renter, there’s no reason not to have renter’s insurance. This coverage is often available from the same company as your vehicle insurance and can cost as little as $5 a month. Also, if you drive a newer car, make sure your car coverage offers gap coverage. This insurance will cover the depreciation difference, ensuring you can pay off your car if it’s ever totaled in an accident.

Most people don’t take bankruptcies lightly. It’s often a last resort decision and many people agonize over the decision before deciding to file. However, some of the situations that lead to filing in the first place, such as a large medical debt, a job loss and an unexpected expense due to an act of nature are unavoidable. Before ruling it out, consider calling bankruptcy lawyers and get their opinion on your situation.


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