Top Causes of Bankruptcy

April 29th, 2020
Posted By
Michael Ryan Jones
petition for bankruptcy paper
Now more than ever, many Americans are feeling financial burdens they may not be able to keep up with. We may feel alone in our financial struggles, but the reality is, many of us are facing similar challenges. For some, one event may be the tipping point which causes us to file for bankruptcy. Today, we wanted to share five reasons why people declare bankruptcy.

Medical Expenses

Numerous studies show that medical expenses are the top cause for United States families to declare bankruptcy. In a 2016 study by the Kaiser Family Foundation, it was reported that medical bills forced 1 million adults to declare bankruptcy. That same study also found that 26% of American adults aged 18 to 64 struggled to pay their medical bills. This would make sense as the common ages for individuals to file for bankruptcy has been, year and year, those in the 35 to 54 age bracket.

Job Loss and Reduced Income

In a March 2020 report by the Bureau of Labor Statistics, the percentage of unemployed individuals rose to 4.4%, with the number of unemployed persons reaching 7.1 million. Though this is a result of the COVID-19 pandemic, it is likely to create lasting effects on American households when it comes to income. When the economy is down, many employers are not looking to hire or may not be offering benefits as they used to. Reduced income and new expenses can create a perfect storm for financial struggles.

Divorce

Divorce is not only emotionally stressful, but it can be financially difficult as well. When couples decide to divorce, many factors change including income, monthly support payments, loss of assets, shared debt, etc. While many may think it will result in savings, the reality is, divorce is expensive.

Poor Budgeting Can Lead to Bankruptcy

In a 2019 study, it was found that 67% of people have a budget - while 33% do not. While it seems most popular to have a budget with younger adults, over time we seem to loosen our grasp when it comes to being financially savvy. When you couple rising prices, lower incomes, and world events, budgeting can be the make or break between financial hardship and financial success.

Credit Card Debts

On average, 38% of Americans are in the middle of on-going credit card debt. In many cases, this has nothing to do with a shopping addiction or living above one’s means. In fact, it’s a result of all of the above factors. When families face unexpected expenses, piling medical bills, and loss of wages, it is easy to add that debt to a credit card over time. Unfortunately, high-interest rates make it nearly impossible to pay down these debts in a timely manner, making the debt even worse.

A Second Chance For a Prosperous Financial Future With The Jones Law Firm - Recover from Bankruptcy

We know that debts can seem unmanageable. But if you are facing any of the above financial difficulties and are considering bankruptcy, The Jones Law Firm is here to help. If you live in Columbus or central Ohio and are experiencing financial distress, we encourage you to contact The Jones Law Firm for a free consultation about how we can help determine whether Chapter 7 or Chapter 13 bankruptcy is right for you. With offices in Reynoldsburg, Ohio, The Jones Law Firm works with clients in and around Columbus, Ohio. Don’t delay. Your financial future begins now.
Categories: General Bankruptcy