While there are a variety of reasons as to why people end up filing for bankruptcy, there are certainly some leading causes. Based on recent studies, bankruptcy lawyers in Scottsdale break down the top 10 leading reasons. As you’ll see, the percentages represent the proportionate weight as to why an individual ultimately files for bankruptcy. Let’s take a look at them.
Medical Expenses (42%)
According to research, 42% of all personal bankruptcies are a result of complicated medical expenses. Interestingly enough, the studies also show us that 78% of those who filed had health insurance.
Job Loss (22%)
There are millions upon millions of Americans that are unemployed. As a result, this makes them much more likely to file for bankruptcy. Those who are unemployed often pay for health insurance out-of-pocket.
Unmonitored Spending (15%)
Bankruptcy can often come as a result of credit card bills, hefty mortgages, and expensive car payments. Uncontrolled spending habits can put Americans on the unfortunate path to filing.
Legal fees, child support, and alimony can result in heightened financial stress. Unfortunately, nearly one out of every two marriages fail in America.
Unexpected Disaster (7%)
Unanticipated disasters such as earthquakes, floods, or hurricanes can be very hard to prepare for. Without insurance, this can possibly result in bankruptcy.
Avoiding Foreclosure (1.5%)
Someone can spend nearly a lifetime preparing to buy a home. In order to avoid foreclosure, some Americans will file for bankruptcy to reorganize debt in an effort to save their homes.
Poor Financial Planning (1.5%)
In the absence of a logical financial plan, bankruptcy can always occur. You should always build up your cash savings for out of the blue expenses that could lead to debt.
Preventing Loss of Utilities (1%)
With a foreclosure, you also run the risk of losing utilities. Keeping your lights and heat on too often can have severe financial consequences.
Student Loans (1%)
Fortunately, it may be possible to consolidate student loans with a bankruptcy. Speak to your bankruptcy lawyer about your options, if any.
Preventing Repossession (1%)
If a creditor repossessed your car, bankruptcy may put you in a position to have your vehicle returned, in addition to any other personal property that may have been repossessed.
In order to avoid bankruptcy, consider steering clear of the aforementioned leading causes. Reading often and talking to people in order to education yourself will help you in the long run. Doing a few things right and maintaining those habits will put you a great place financially and will help you see through your monetary goals.