Top Five Reasons People File Bankruptcy In Indiana

The underlying reason people file bankruptcy is they do not have sufficient income to pay their debts. That’s especially true if a crisis emerges. A third of Americans say they would have problems paying a $400 emergency expense. Crises like the ones discussed below often come at unexpected times. But they inevitably arise in almost everyone’s life at one time or another. Therefore, Chapter 7 or Chapter 13 bankruptcy will be on almost everyone’s radar at one time or another.

Chapter 7 quickly eliminates credit cards, medical bills, and most other unsecured debts. Chapter 13 gives families up to five years to erase past-due mortgage payments and other secured debt delinquencies. Both forms of bankruptcy protect your house, car, retirement account, and other core assets. A Chicago bankruptcy attorney can meet with you, evaluate your financial situation, and point you in the right direction.

Unemployment

As mentioned, most families live hand to mouth. The average unemployment period is about five months. Many people can scrape by for much of this period. But eventually, they must begin skipping credit card payments and even mortgage payments. These unpaid bills quickly pile up, and lenders quickly lose patience. Unemployment’s effects are not just financial. The emotional instability is sometimes even worse. Bankruptcy addresses these issues as well. Filing a voluntary petition helps you take control of your own financial situation.

Illness

The average hospital bill is around $3,000 a day. A few days of intense medical care can wipe out a few years of savings. Even if the patient has medical insurance, the deductibles and co-pays alone are sufficient to send many people under the waves. Furthermore, when people are in the hospital or seriously ill or injured, they are usually unable to work. So, financial problems and emotional stress are even worse. As mentioned, bankruptcy eliminates most of these medical bills. Patients can still pay these expenses if they want to, but that repayment takes place on their terms.

Divorce/Separation

The divorce rate has declined in recent years, but divorce’s moral acceptability rate recently hit an all-time high. Money problems are among the leading causes of marital strife, so divorce and bankruptcy often go hand in hand. Separation and divorce also exacerbate money problems. It’s much more expensive to maintain two households for two people than one household for two people.

The divorce/bankruptcy connection is so common that many people wonder if they should file bankruptcy or divorce first. If possible, it’s usually better to file bankruptcy before divorce. Bankruptcy eliminates debts and thus makes a divorce property division more straightforward. Complex property classification and distribution is frequently the most expensive and time-consuming portion of a divorce.

Expense Uptick

Loss of income is not the only thing that could cause a financial emergency. Adult children often move back home and family members sometimes die unexpectedly. Older adults are especially vulnerable to such events. That’s the main reason the over-65 bankruptcy rate has skyrocketed since the 1990s. Bankruptcy helps families meet these unexpected expenses without having to tap into their retirement accounts, home equity, and other large financial assets.

Overspending

Despite what many bankers claim, this area is rarely the sole cause of bankruptcy filings. However, it’s often a contributing cause. In many cases, it’s a significant contributing cause. Many people can weather some minor financial storms if their spending habits are under control. Bankruptcy gives people the chance to re-evaluate their spending patterns. That’s especially true if you file Chapter 13. Instead of spending money on luxuries, debtors spend it on a monthly debt consolidation payment. As a result, they quickly learn how to live without some of these things.

Reach Out to Diligent Cook County Lawyers

Most people file bankruptcy due to events that are beyond their control. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle matters in Illinois and Indiana.

Resource:

minneapolisfed.org/article/2021/what-a-400-dollar-emergency-expense-tells-us-about-the-economy