There are many reasons why people choose to file for bankruptcy, but most fall into one of a few categories. If you are considering filing, it can be comforting to know that others have been in your shoes. If you face any of the following situations and feel backed into a corner financially, you are not alone. Bankruptcy has helped many people with similar circumstances to your own move forward and overcome their financial struggles.
What are some of the most common reasons people pursue bankruptcy?
1. Loss of Employment
As stable as your job might seem, it can be gone in an instant. Unfortunately, it can be tough to prepare for the unexpected. Even the most avid savers often find they are stretched too thin once they are on the unemployment line.
If you have lost your job and are having a tough time finding a new one – as are many are in today’s economy – bankruptcy can help you take control of your situation and build a bridge from your current struggle to financial peace.
2. Medical Bills
You might think health insurance will protect you if you are stricken with a catastrophic illness, but this is not always the case. Even if insurance covers a portion of your treatment, it can still mean thousands of dollars or more out of your pocket. Not to mention a health problem can make it impossible to continue earning money, so all you have to work with is what you have in savings and assets.
Medical debt is a common reason people file for bankruptcy, especially since so many have no way to ever repay the money they owe to doctors and hospitals. If you are struggling with medical bills, speaking to a bankruptcy attorney is one of the best decisions you can make.
3. Student Loan Debt
It’s hard to believe that something as common as attending college could put you in a bad financial position, but it happens all the time. Students borrow tens of thousands of dollars to earn their degree, but are unable to find a job that pays enough to meet their repayment obligations. Student loan debt is one of the main reasons bankruptcy is being filed by an increasingly younger demographic. If you are faced with insurmountable student loan debt, it might be time to speak to an attorney.
It is always sad when a married couple have to part ways. Unfortunately, on top of the emotional burden comes a financial one. Between the legal fees and possible child or spousal support issues, people often find themselves in a much more financially difficult situation. Instead of potentially having two people to work together towards the expenses and obligations of a household, it is now down to one. The numbers often do not work and either an individual is saddled with debt from the marriage or incurs it afterwards trying to maintain a similar standard of living. Bankruptcy after divorce is very common. Bankruptcy helps the individual tackle their new life with a fresh start financially.
5. Underwater Mortgages
Many people found themselves owing astronomical mortgage payments after the housing bust and in many cases, their mortgages were worth more than their homes. Bankruptcy does not eliminate your mortgage, but it can give you an opportunity to restructure it, creating a scenario in which you can manage payments. Sometimes, a bank will be more likely to grant a loan modification when they see the other unsecured debt has been eliminated. In these cases, a bankruptcy can be a precursor to a reduced mortgage.
If you are in any of these situations or you are considering bankruptcy for any other reason, we can help. Contact the law office of Frank J. LaPerch, PC at 845.942.5500 to discuss your case.