Bankruptcy may be a step you never thought you would have to take, but you need a solution to your mounting debt, and quickly, before the problem consumes you. It may help to know that you are just one of about 1.5 million people a year in the U.S. who file for bankruptcy. Your circumstances are probably similar to many of theirs.
Here are five of the most common reasons that people decide to settle their debt problems through this kind of court action:
High medical expenses
A study undertaken by Harvard University found that 62 percent of the personal bankruptcies filed in the U.S. were because of medical expenses. The study also showed that 72 percent of those who filed had health insurance but were still unable to pay off their bills.
Loss of a job
Even if you have a good severance package after losing your job, the funds may be depleted quickly. You will have additional expenses, such as expensive COBRA health insurance, and you may have no idea how long it will be until you are gainfully employed again.
Increasing credit debt
You may equate credit debt with excessive spending. However, emergency situations, serious illnesses or an unexpected decrease in your income can cause your credit debt to mushroom.
When you were married, there may have been two incomes, but now there is only one. You likely split the assets, which is another financial blow. In addition, if you cosigned on a loan for your ex, you will be held responsible for repayment.
Student loan repayment
Student loans are the cause of about 1 percent of all bankruptcies. If you are mired in debt because of your education, you are not alone.
When it comes to getting rid of your debt problems, bankruptcy may not be your only option. However, as the best solution for many Americans suffering under financial burdens, it may be is the right course of action for your particular circumstances.