Top Five Reasons People File Bankruptcy

Most Indiana families have little or no money in their savings accounts. So, when the financial storms of life hit these households, they do not have the resources to deal with them. That’s especially true when misfortune follows misfortune.

Additionally, there may be a long-term crossover effect. For example, David might buy an expensive car after she gets a promotion at work. If she gets downsized two or three years later, she may have trouble making the remaining payments on that auto loan. And, for the most part, banks are quite unforgiving in situations like this. They just want their money. An important related point is this: For the most part, if you need a Chicago bankruptcy lawyer, your financial problems are not your fault.

The Davids of the world have two bankruptcy options. Chapter 7 eliminates many debts in just a few months, and Chapter 13 gives people time to pay their way out of debt. In both cases, the Automatic Stay halts creditor adverse action, like repossession and foreclosure.

Medical Bills

Many people predicted that the Affordable Care Act would practically eliminate medical bankruptcies. But the most recent data states that medical problems account for two-thirds of the consumer bankruptcies in the United States.

Some people have issues with the medical bills themselves. Many insurance policies only cover 80 or 90 percent of these costs. That sounds like ample coverage, but 10 percent of a $100,000 bill is more money than most people can afford.

Other people miss work because of illness or injury, and the lost income creates a snowball effect.

Income Loss

As mentioned, most people live from hand to mouth. Therefore, even a brief job loss often has a devastating financial effect. If the debtor is unable to find another job right away or must accept a lower-paying position, the impact is almost infinitely worse.

A growing number of people own their own businesses and they count on this income. Statistics vary as to the new business failure rate, but there is no doubt that it is high.

Divorce

Marriage dissolution divides income and assets, while at the same time, it increases expenses.

The family suddenly goes from one mortgage or rent payment to two. This same effect happens in other financial areas as well. If the family was barely making ends meet before, no one should be surprised if financial turmoil follows divorce.

Expenses go up as well. Most non-residential parents must pay alimony and child support. And, most residential parents must pay all of the daycare tuition instead of only half of it. Additionally, both parents must usually pay substantial legal fees.

Family Emergency

Legal fees may come up in other areas as well. For example, if a family member gets a DUI, the legal fees, increased auto insurance premiums, and other costs usually exceed $10,000.

There are other situations as well. Everyone dies eventually, but not everyone has life insurance or other financial measures in place. Funeral, burial, and other expenses often exceed $9,000.

Overspending

Financial irresponsibility does not cause too many bankruptcies, but it often makes a bad situation worse.

Bankruptcy, especially Chapter 13 bankruptcy, teaches financial discipline, so you can make the most of your fresh start.

Contact Experienced Lawyers

If you are experiencing financial problems, you probably need to file bankruptcy. For a free consultation with an experienced Chicago bankruptcy attorney, contact the Bentz Holguin Law Firm, LLC. We routinely handle matters in Illinois and Indiana.

Resource:

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