A lot of people are misinformed about why others file for bankruptcy. They believe it is down to poor financial management or getting caught up in trying to live a life they see on social media, full of big houses, luxury cars and designer clothes.
While these factors can sometimes be behind an individual’s bankruptcy, most of the time they are not. The reasons people get into such debt often involve unexpected financial hits that would probably still have left them with unpayable debts even if they had been carefully saving their whole lives. Let’s look at a few.
1. Job loss
As thousands of federal workers have suddenly found out, unemployment can happen when you least expect it. Keeping up with the bills can soon become impossible without a steady income.
2. A medical emergency
One day you and your family are all fine and healthy. Then that health is taken from one of you. It could be through the discovery or development of a serious illness or due to injuries in an accident. Even with health insurance, the cost of medical care can still devastate a family’s finances.
3. The cost of housing
We have seen the interest rates rise on mortgages over the past few years. For many people, they have become unaffordable. Even if they scrimped and saved elsewhere, they may not have been able to keep up with the increased mortgage payments.
Renters, too, have faced increased difficulties. Housing has become unaffordable in many parts of the country – including her in Washington — for those with anything but an extremely well-paid job. Many have had no choice but to take out loans or use their credit cards to try and keep a roof over their head and food in their family’s stomachs.
Learning more about bankruptcy options could be wise if you find yourself with debts you can no longer afford.