Survey Reveals the "Big 3" Reasons Why People File for Bankruptcy
Richard Fonfrias, J.D.
Chicago’s Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC
During times of financial turmoil, the term “bankruptcy” is used a lot.
Yet most people don’t know what bankruptcy is or what it entails.
They know it means that people who file for bankruptcy are broke. And they know it means that bankruptcy filers spent money they didn’t have to buy things they didn’t need.
Both of which are dead wrong!
Bankruptcy has a long history in America. Our founding fathers wrote bankruptcy into the U.S. Constitution because they felt people should have the opportunity to get a “fresh start” when their money problems grew beyond their control.
Here are the real reasons that push people into bankruptcy:
REASON #1: Medical bills. People who have health insurance are usually protected from average, routine medical bills. Yet a single catastrophic accident or long-term illness can launch medical costs into outer space, beyond the limits of health insurance and beyond almost anyone’s ability to pay.
The American Journal of Medicine reported that 62.1% of bankruptcies – nearly 2 out of 3 – stem from high medical bills. “Middle-class families frequently collapse” under the financial stress of an extremely high deductible, or a health policy that doesn’t cover the illness or injury they face and they need money help to get by.
REASON #2: Loss of a Job. Most people who lose jobs do so without advance notice. They didn’t plan ahead because they thought their position was secure. So any emergency money they might have doesn’t go far when the job hunter needs new training or must move his family to a new location to use the skills he has.
In addition, loss of a job impacts the family who bought a home or has a child entering college. All of these bills – one on top of the other – can push most families off the financial cliff, even if the breadwinner has a job. Without one, their situation quickly grows much worse, and past due bills accumulate.
REASON #3: Divorce. Many divorced couples find it impossible to continue their new lifestyle when there is only one person working. That’s like cutting the family’s income in half. Add to that the costs of alimony, child support, lawyers’ fees and court costs and their financial position falls from difficult to hopeless.
Many companies work with consumers to help them manage or consolidate their debts. But often, by the time people contact the company, their problems are beyond repair and they need the fresh start promised in the U.S. Constitution and protection from creditors.
Before you make any decisions about your finances, I encourage you to call me. I am an experienced Chicago BK lawyer who specializes in financial help for businesses and individuals including IRS debt help, foreclosure avoidance and bankruptcy. I’ll give you the facts, look over your situation, and answer your questions. Then you’ll be able to make an informed, intelligent decision. And I offer this information to you without charge. If you would like to speak in confidence to a bankruptcy attorney in the Chicago area, please give me a call.