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What is the most common cause of bankruptcy?

On Behalf of | Oct 12, 2021 | Bankruptcy |

Bankruptcy can happen to anyone, but that’s not how a lot of people look at it. They think of it as a legal process that shows that someone made serious financial mistakes and brought this on themselves. They assume, for instance, that the person just spent way more than they earned and put it all on a credit card until they couldn’t sustain it anymore. 

The truth, though, is that bankruptcy usually doesn’t work like that. Most cases come from things people have no control over. That’s why it’s important to realize that the person is not at fault, that their mistakes are not the reason for the bankruptcy and that anyone really can find themselves in that position. 

Most bankruptcy cases come from one source

Studies consistently find that the majority of bankruptcy cases happen because of medical expenses. Under the current American healthcare system, getting medical care can be incredibly expensive. 

This is true even for those who have insurance. They may not be able to meet their deductible without spending more than they can afford, and they have to pay their co-pays. 

Additionally, many people only have insurance through their work. If they lose their job, they suddenly have no coverage at all. Say you get seriously injured in an accident while looking for a new job. How are you going to cover those costs, which could reach into the tens of thousands of dollars? Roughly two-thirds of all bankruptcy cases involve medical debt. 

Exploring your options

If you are facing this type of debt, it’s important to see how useful and helpful bankruptcy may really be. Consider your options carefully.