Fact: The main reason people end up in bankruptcy is due to unavoidable debt and unforeseen financial hardships.
Many people assume that those who enter bankruptcy are poor money managers that simply spent more than they could afford to repay. Although there are plenty of people who fit this description, the majority of people that file for bankruptcy do so because they have few other options to manage the situation they have been dealt.
The biggest contributor to personal debt is medical bills. They add up quickly, are unavoidable and many people have no choice but to accumulate the medical debt burden left after expensive medical treatments. As serious aliments continue to plague our society the costs associated with treatment can be overwhelming. The health care industry is less than helpful and many Americans simply don’t have any, or adequate, health care coverage.
During tough economic times as these many people are working diligently to maintain their expenses and hold onto some type of employment. More people are being laid off from jobs they have held for numerous years, some without any compensation to ease the transition. Unemployment rates have hit an all-time high and the number of people seeking unemployment assistance grows each day. Many people are taking hourly jobs, temporary work or several part time positions to feed their families. When income is lost, the bills keep coming and many are left with tough decisions.
Losing a spouse through divorce can significantly impact the financial balance of a family. When the primary provider is no longer present, the burden of responsibility becomes shifted among the remaining family members. A once stay at home mom is left to find work to help pay the bills, while the dad is required to pay hundreds of dollars in domestic support payments. A once unified family must now work twice as hard to provide even the minimal coverage for essential living expenses.
There are times when expenses arise that can put significant financial pressure on a family. One example is tax debt. When tax liabilities outweigh tax credits, many families are left owing the IRS money. The bad thing about tax debt is that it must be repaid and, generally, there aren’t many debt relief options available to help repay the debt.