In 2020, 544,463 bankruptcy filings, according to statistics released by the US court system. While the number of people filing for bankruptcy has decreased in recent years, bankruptcy is still relatively common for many individuals and businesses. It is not an easy decision to file for bankruptcy because bankruptcy can affect a person’s credit history and score for years to come. For many, filing for bankruptcy is a last resort after hitting rock bottom. However, knowing the main factors that lead people to file for bankruptcy may help you realize that you are not alone and that bankruptcy could help you.
Reason 1: Student Loan Debt
The cost of getting an education continues to increase. In the United States, there is over $1.53 trillion of student loan debt. One out of every four Americans faces significant challenges regarding paying their student loan debt. Like child support and alimony, filing for bankruptcy will not eliminate your student loan debt except in very rare cases of extreme hardship. However, filing for bankruptcy may assist you with some of your other debt so you can better pay your student loan debt.
Reason 2: Medical Bills
Health insurance is also costly. Many bankruptcies are due to medical expenses. An unexpected medical incident can stop a person from being able to continue working. When a person loses his or her job, they lose their health insurance. As a result, their medical expenses begin to pile up, forcing many people to declare bankruptcy because they cannot pay their mounting medical bills.
Reason 3: Loss of Employment
In this unstable economy, many people have lost their jobs. For Americans living paycheck-to-paycheck, the loss of a job can render them unable to pay their bills. They may be one paycheck away from bankruptcy. Their sudden reduction in income and lack of emergency savings could mean that they can no longer pay their bills.
Reason 4: Divorce or Legal Separation
Many Americans underestimate how expensive divorce or legal separation can be. When two people separate their households and have costly legal fees regarding their divorce, it can cause extreme Financial instability. Each party is now responsible for their household expenses, mortgage or rent, and other living expenses. If you add on child support payments and alimony, either party may find themselves unable to pay their bills and look toward bankruptcy as a solution.
Reason 5: Excessive Credit Card Debt
Most Americans carry some amount of credit card debt and may rack up a significant amount of credit card debt without thinking of the consequences until it is too late. They may take out new credit cards to pay off their other car, contributing to the debt snowball. Declaring bankruptcy can help them discharge a significant amount of consumer credit card debt.
Contact a San Diego Bankruptcy Attorney Today
Are you considering filing for bankruptcy in San Diego? If so, the skilled bankruptcy attorneys at Bankruptcy Law Center will carefully review your situation and provide you with excellent legal advice. Contact us today to schedule your free initial consultation.