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What are the most common causes of bankruptcy?

| Dec 18, 2019 | Firm News

Unfortunately, significant debts are a reality for many hardworking people across the United States. It’s common for people to feel guilt or shame regarding their debts, and due to this, they may experience some level of denial, choosing to continue maintaining the lifestyle they are accustomed to by using credit cards as funding.

However, for those not willing to address their debts, the problem will not go away. In the majority of circumstances, it will be necessary for debtors to go through bankruptcy to get relief from their debts and to start living their life without such a heavy burden. The following are some of the most common reasons why people get into debt and need to file for bankruptcy.

As a result of a divorce

Depending on the circumstances, a divorce can lead to huge financial difficulties. It may be the case that there were significant marital debts that needed to be divided between spouses. Additionally, without the financial support of your ex-spouse, you may be struggling to continue making mortgage costs and affording the essentials.

Due to job loss

If you are living from paycheck to paycheck like the majority of Americans, an unexpected job loss can lead to immediate financial difficulties. If you are unable to find new employment, your financial circumstances can spiral quickly out of control.

Due to credit card dependence

Credit card dependence is, unfortunately, a common issue for many debtors. When a person feels that their income is not enough to fund their lifestyle, they may start to use credit cards. When credit card debts are not paid on time, interest can add up and lead to further debt. It’s important to try not to rely heavily on credit cards since it is one of the most common causes of bankruptcy.

Due to medical bills

If you have experienced an unexpected illness, this may have wreaked havoc on your finances, especially if you do not have health insurance. Medical debt can sometimes be renegotiated, but it is often necessary to file for bankruptcy to clear it.

If you are struggling with significant debts in North Carolina, consider the possibilities presented by bankruptcy. Taking action in the new year can mean that you will have a bright future to look forward to.

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