Bankruptcy can happen to anyone at any stage of their lives, whether they're just starting out or already established. Financial problems can have an immense impact on our well-being, and it's important to recognize that bankruptcy is a reasonable option for those who find themselves overwhelmed by debt.
Filing for bankruptcy isn’t an easy decision, but it can help you regain control of your finances. It's important to understand what bankruptcy entails and to speak to a professional for personalized advice.
4 Reasons Why People File for Bankruptcy
The best way to prevent bankruptcy is to stay informed about personal finance matters and be mindful of how much debt you're taking on. Being proactive and responsible with your finances can help you avoid this difficult situation altogether. Keeping an emergency fund on hand and creating a budget are two great ways to maintain financial stability.
So, what happens if none of that is enough? Even the best-laid financial plans can go awry when unforeseen circumstances hit. People who never thought they would consider bankruptcy can find themselves in that very position. Let’s discuss some of the reasons why.
1. Unemployment or Loss of Income
All of us design our lives around the income we make. The lifestyles we have are more or less reflections of how much money we make and how much of it we’re willing to spend. Whether it’s income from your own business, your employer, investments, or public benefits, a loss or reduction in any of it can upend your financial situation.
You may not know how long you’ll be out of work, and without a hefty savings to keep your household afloat, unpaid bills can pile up with fees and interest. Even just one past-due mortgage payment could put your home at risk of foreclosure. In a matter of a few weeks or months, you can find yourself dealing with insurmountable consumer debt. As soon as you realize your debt is getting out of control, you should reach out to a bankruptcy lawyer for help.
2. Unexpected Medical Expenses
Having health insurance can save you a lot of money on medical costs, but you may not have enough to cover an important procedure or medication that you now require. Unfortunately, medical debt is an incredibly common reason why people need to file for bankruptcy. Fortunately, though, bankruptcy can wipe out medical debt when the cost of medical care is more than you can afford.
Even better, when you choose Chapter 7 bankruptcy to wipe out your medical debt, you can claim a variety of exemptions that help you protect important assets or property from liquidation.
When you go through a divorce, you can find yourself forced to adopt a new lifestyle you may not be prepared for. If you and your ex-spouse shared a combined income, learning to live without their portion of income can cause problems with debt. So too can your new financial responsibilities, which can include alimony, child support, and paying your attorneys for their assistance.
It’s important to note that bankruptcy can’t help you get rid of child support debt or alimony debt. These debts never go away, but you can get a discharge for other kinds of debt that are keeping your head under water. Consult with a bankruptcy lawyer for personalized guidance, but you generally want to stay on top of alimony and child support debts to avoid fees, interest, or even criminal liability for nonpayment.
4. Business Failure
If you are or were a business owner, unfortunate circumstances may have caused your business to fail. In this situation, you may find yourself relying on credit cards and loans to make ends meet, but failing to keep up with this debt can cause it to go out of control.
If you’re trying to get your company out of a difficult financial situation, you have options in Chapter 11 and Chapter 7 bankruptcy. If your company’s hardship has also affected your personal financial situation, you should consult with a professional about Chapter 7 or Chapter 13 bankruptcy.
Are You Considering Bankruptcy
At Buchalter & Pelphrey Attorneys At Law, we understand the struggle of having too much debt and not knowing where to turn. We strive to provide our clients with the highest quality legal advice and representation in order to help them obtain debt relief through filing for bankruptcy.
We know that people can find themselves overwhelmed by debt for a variety of reasons, and our team is here to demystify the bankruptcy process for you. Whether you’ve overextended yourself due to medical bills, job loss, or simply mishandling your finances, we can help you regain control of your finances.
Learn more about our legal services during a consultation with us. Contact Buchalter & Pelphrey Attorneys At Law online to get started.