It is well known that medical debt is the No. 1 reason for bankruptcy in the United States. In fact, some reports indicate that it could be responsible for a staggering 66% of these cases. Most of the time, when people realize they have to file for bankruptcy, it’s just because they can’t afford to pay the hospital.
But what else causes bankruptcy? There may only be one-third of the total cases left, but you’re still talking about thousands of annual cases. What else leads to this process?
Divorce can lead to bankruptcy. It is often an expensive process and you may lose assets in the split. You may also have more bills after your divorce than before, leading to financial trouble in the months to come.
Needless to say, some people file for bankruptcy just because they end up spending more than they can afford. As useful as credit cards are for building your credit score, using them beyond your means can lead to financial problems — and credit card companies generally encourage this behavior.
Many times, the real issue with the above — spending too much — is that you lose your job or have your wages reduced. You weren’t actually taking on too much debt when you were employed. You made wise decisions and lived within your means. When the company downsizes or folds and you lose your job, though, your mortgage and car payments are more than you can afford any longer.
Do you know what options you have for debt relief?
Financial issues do not have to feel as daunting as they often do. You just need to know what options you have and if bankruptcy can help.