The Cassidy Law Firm Blog

Monday, January 22, 2018

Top Causes of Bankruptcy

Is credit card debt the top cause of bankruptcy?

Over 800,000 people declare bankruptcy every year.  Bankruptcy can be a powerful tool for individuals strapped with debt to herald in a fresh financial start.  Eligible individuals in New Jersey may be able to file for personal bankruptcy to erase their unsecured debts.  The causes of bankruptcy are numerous, and at times the debt that ultimately leads to bankruptcy is simply unavoidable.  Our New Jersey bankruptcy attorneys discuss some of the top causes of bankruptcy below.

Medical Debt

According to the Kaiser Family Foundation (KFF), medical bills are the number one cause of bankruptcy in the United States.  More than a quarter of Americans struggle to pay their medical bills and 40 percent report acquiring debt due to a medical issue.  This includes even those with health insurance.  

Medical expenses are troubling because they can come up so unexpectedly.  While planning ahead for such expenses can help, a major medical issue could send anyone into debt.  The good news is that medical expenses are generally considered unsecured debt that can be eliminated in a Chapter 7 bankruptcy, if other factors are met.

Credit Card Debt

Credit card debt trails medical debt as the leading cause of bankruptcy and is responsible for thousands of filings annually.  The loss of your job, emergency expenses, and illnesses can quickly rack up credit card debt that you may now find yourself unable to tackle.  When credit card debt inhibits your ability to meet your daily living expenses, it may be time to explore bankruptcy and other credit card debt relief options.

Job Loss

You count on your income to pay your basic expenses.  If you suddenly find yourself jobless, your debts may mount out of control.  Job loss may also lead to loss of your medical insurance, compounding medical debt issues discussed above.  Bankruptcy filers are often individuals who have lost their job and now find themselves unable to pay back their debts.

Emergencies

Without significant funds in savings, an emergency can send you into a financial spiral.  Emergencies could include damage to your home or your vehicle.  Either of these events can quickly eat your savings, leaving you unable to manage your debts.

If you are considering filing for bankruptcy, consult with a bankruptcy attorney to find out more about your legal rights.  You will need to meet income and asset eligibility requirements in order to file for bankruptcy.  Take charge of your financial future today by contacting a bankruptcy attorney for more information.


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