Bankruptcy can happen to the most reckless spenders and the most cautious savers. It often has very little to do with the financial decisions any one person made. There are usually factors that are outside of your control that help to cause a bankruptcy filing.
To get a better idea of why bankruptcy occurs and how it can help those in need, let’s take a look at the top causes in the U.S.
You may not expect these common causes of bankruptcy
People are often surprised to see such a variety of reasons for personal bankruptcy filings, such as:
- Medical debt and hospital bills
- Reduced income levels (job changes, reduced hours, etc)
- Job loss
- Credit card debt and outstanding balances
- Getting a divorce
- Unplanned expenses
- Student loan debt
- Monthly bills and utilities
- Foreclosure
- Overspending
As you can see, overspending certainly does make the list, but not until the very end. Even then, someone’s financial distress could be the result of other factors, as well.
For instance, your spending may be fine on your current income, though you’re living close to your means. Then you lose your job and are forced to settle for a lower-paying alternative. All of your responsible spending now appears to be far exceeding your means, and you have debt that you can’t pay off — even though you knew you could when you took on that debt.
What can you do when debt is overwhelming?
Financial issues may feel complicated, but bankruptcy is there for you when you need it. Make sure you take the time to look into all of the legal options you have at your disposal.