There are five reasons why people file for bankruptcy in the country. Although, the top five reasons are only a few, they are reasons that are common with all consumers.
Medical expenses are high on the list of reasons why people go bankrupt. Health issues such as injuries and disease can cost hundreds of dollars to take care of and even people with some type of health insurance still will have medical costs to pay even after insurance has paid its share. Medical bills can clean out home equity, college funds, retirement accounts and savings accounts.
Losing ones job can be devastating, but it can affect how one will pay the bills. Even people that have a savings account, retirement fund, equity in a home or college accounts cannot live without a job. Sooner or later the money will run out. If a person takes an early withdrawal on a retirement fund or on a college fund, there will penalties and interest to pay at tax time, which can cost more than what a person has, if the person has spent the money already.
Along with losing a job, comes the loss of health insurance and the COBRA insurance is high priced that most people cannot afford it even though it is offered. Without being able to find a suitable job that paid even close to what a person was making, can weigh heavily on the choice to file for bankruptcy.
Excess credit may not be a problem when a person was working, but it will be when a person has no job. Some people that have jobs, still live outside their means and debt can eventually bite into money needed for every day living. If a person cannot manage the debt or consolidate the debts into one payment, bankruptcy is the next consideration for most.
Ending a marriage is another reason for bankruptcy. When a family is used to two incomes and has to learn to live on one income when a divorce is pending or granted, bankruptcy made be the only recourse that one or both parties have to consider. People that need to make alimony or support payments may find it hard to pay bills or even have their own place to live.
Expenses that pop up unexpectedly can have a devastating affect on income and credit. Loss of property due to natural disasters can lead to bankruptcy since more than likely the person has loss everything or most of everything and insurance doesn’t always cover everything that you would need to buy new. No one wants to find himself dealing with san diego bankruptcy attorney because of this financial issues. Surely, as stated earlier, there are several factors that could lead you to bankruptcy. But if you are careful and wise enough, you will not suffer from this frustrating situation. Hence, always make plans and make sure that every decision you make is sound and effective.
In the end, bankruptcy is the way that most consumers choose to follow. However, if people would start planning budgets and paying down debt, bankruptcy may not be needed.