Top 5 Reasons People File Bankruptcy in Illinois

Fundamentally, people file bankruptcy because they do not have enough money to meet their obligations, at a particular point in time. Roughly two-thirds of Americans have less than $1,000 in their savings accounts. When the financial storms of life hit, they simply don’t have the resources to weather them.

Unfortunately, many people delay a necessary bankruptcy filing. As a result, the problem gets worse and unpaid moneylenders get desperate. So, it’s better to file bankruptcy early and get ahead of the situation. That way, you control your finances. They do not control you.

Lack of money is the general cause of bankruptcy filings in Illinois. Here are some specific reasons.

Medical Bills

The Affordable Care Act partially slowed the avalanche of medical bankruptcies. But even if people have insurance, the copays and deductibles alone are often staggering, especially for chronic illnesses or serious injuries. Additionally, insurance companies lose money when they pay claims. So, adjusters look for any possible loophole which enables them to reduce or deny coverage. Unpaid medical bills are very stressful. Many people experience Post Traumatic Stress Disorder-type symptoms as these bills pile up.

These bills are unsecured debts. So, they are dischargeable in a Chapter 7 or Chapter 13. After discharge, the patient may still repay the obligation. But repayment is optional. You only pay the bill if you want to pay it.

Unemployment

Most people live hand to mouth. Even a temporary income disruption often has devastating results. Generally, people first fall behind on credit card bills and other unsecured debts. The snowball effect soon becomes overwhelming. Making matters worse, unemployment, like medical bills, are usually not the debtor’s fault. Almost no one asks to get sick, and almost no one voluntarily gets laid off.

Assuming the income loss was temporary, Chapter 13 bankruptcy is an excellent option. It gives debtors the breathing room they need to catch up on outstanding obligations.

Divorce/Separation

These events are often financially devastating. Your household suddenly has half as much income as it had before. Additionally, many people must pay support obligations. Aside from medical bills and unemployment, divorce or separation may be the leading cause of bankruptcy filings in Illinois.

It’s usually better to file Chapter 7 bankruptcy before your divorce settles. That filing makes the divorce property settlement easier to work out, so litigants end up saving time and money.

Overspending

Some people do not have enough money because they spend too much on luxury items. In some ways, overspending is a bit like oversteering on a road. If you make a correction soon enough, you can avoid tragedy on the road and with your finances.

As a bonus, Chapter 13 bankruptcy installs financial discipline. This discipline helps many people avoid future overspending problems.

Unanticipated Expenses

Insurance normally does not cover home repairs, family emergencies, vehicle repairs, and other such expenses. If you own an older home or an older car, these bills are even higher and more frequent. Since most people have little savings, a few thousand dollars might as well be a few million dollars.

Typically, unanticipated expenses are unsecured debts. So, if you file bankruptcy, the judge will probably discharge the debt. If you borrow money outside bankruptcy, you risk losing even more.

Touch Base with Aggressive Lawyers

Most people are forced into bankruptcy through no fault of their own. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

bankrate.com/banking/savings/financial-security-0118/

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