The most common causes of bankruptcy 

On Behalf of | Nov 1, 2022 | Bankruptcy

Bankruptcy is a subject that is still somewhat stigmatized. The term is commonly associated with reckless spending. While this certainly can be a contributing factor to financial hardship, it is not enough to fully explain why bankruptcies occur. 

Millions of hard-working people in America are currently struggling financially, and reckless spending has nothing to do with this. Outlined below are two of the more common causes of bankruptcy, which could impact anyone. 

Medical expenses 

The healthcare system in America runs on an insurance basis. Thus, people have to pay for health insurance and there are also additional charges for many medical procedures. Most individuals operate on a monthly budget, and there isn’t always room to create a fund for medical emergencies. If you’re healthy, you tend to live on the assumption that you are going to remain that way. 

But medical issues can come on suddenly, without prior warning. The same can be said for accidents that result in injury. If your medical treatment is necessary, then you don’t really have much of a choice. You’re going to have to pay for it or run up medical debts. Over half of all bankruptcies cite medical expenses as a causal factor. 

Loss of employment 

Even if you are a hard worker and fantastic at your job, your employer may have no other choice but to try and cut costs. Balancing the wage sheets is often where they look first, which means slashing hours or laying off employees altogether. You may find yourself in the position of being out of work through no fault of your own. This means that there won’t be enough money coming in to cover your living costs and you could subsequently find yourself in debt. 

It’s important to address your financial issues rather than ignore them. Having legal guidance behind you will help you to make the appropriate decisions in your unique circumstances.