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The Causes of Bankruptcy


Some people are quick to equate debt problems with irresponsibility. This quick judgment is inaccurate. Bankruptcy is misunderstood. The causes of bankruptcy are multifaceted. It’s complicated.

Irresponsibility is seldom the cause of bankruptcy. In our 35 years of experience, what we’ve seen is that people want to pay their debts. The majority of our clients feel bad that they are unable to pay back their debts. But it wasn’t irresponsibility and careless over-spending that led them to need the protections and benefits bankruptcy offers.

Life-Changing Events

The majority of people who find themselves deep in debt they cannot afford to pay back got in that situation after experiencing a serious life-changing event.

  • Job loss: for many unemployment means losing their sole source of income or a significant portion of their household income, but necessary monthly living expenses remain unchanged. A job loss can quickly lead to unmanageable debt, even just covering necessities.
  • Costly medical emergency: even with health care coverage a medical emergency can cost thousands, even tens of thousands, of dollars.
  • Ill health: the costs of treating chronic illness is exorbitant. It isn’t uncommon for a person fighting for their life to incur tens of thousands of dollars of medical debt, and in some cases even over a hundred thousand dollars of medical debt.
  • Divorce: dividing assets and paying the bills of two households can be costly. Also, it isn’t uncommon for people to enter into divorce because of financial problems.
  • Supporting multiple generations of family: caring for young children, ageing parents, and in some cases, the extended family is expensive.
  • Death in the family: the loss of a loved one may include a decrease in income, and the costs associated with your end of life care and services can be quite high.

Before filing for bankruptcy many people experience one of these life-changing events or other unavoidable situations. It is important to take personal responsibility for the choices we make, and it is rare that careless, irresponsible spending is the cause of bankruptcy.

Charging Basic Living Expenses

It isn’t fancy vacations or a taste for red-soled designer shoes driving people into credit card debt―it is covering basic living expenses. A recent study showed that credit card debt is often incurred to pay for basic needs. Nearly 42% of respondents said that “making ends meet each month” was how they got into credit card debt.

Explore If Bankruptcy is the Right Solution for You

When you simply cannot afford to pay back your debts, for whatever reason, filing for bankruptcy may be the right choice for you.

At the Law Office of Barbara B. Braziel, we are committed to helping people get out of debt and gain the financial freedom they deserve. We invite you to learn more about who we are here. If you live in Savannah, GA or the surrounding areas and have questions about your debt relief options, let’s meet for a free consultation.

Call us today at (833) 522-1069 or contact us to schedule a free consultation.

Find out more about Bankruptcy in our guide: All About Bankruptcy

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

The post The Causes of Bankruptcy appeared first on Braziel Law.

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