What are the most common causes of bankruptcy?

On Behalf of | Sep 22, 2020 | Chapter 7 Bankruptcy |

You can find yourself in financial distress for a variety of reasons. Regardless of why you’re in this position, it’s critical that you do whatever it takes to get back on track. And for some people, that means filing for bankruptcy.

No two people are dealing with identical financial situations, but there are some common causes of bankruptcy. These include but are not limited to:

  • Education-related debt: In addition to student loans, you took on many other types of debt to make it through college. As a result, you’ve found yourself in a deep hole and wondering if you’ll ever be able to dig out.
  • Medical debt: Even if you have health insurance, medical debt can pile up if you’re faced with a serious injury or illness. While you may be able to work out a payment plan with your provider, doing so could put serious strain on your finances.
  • Credit card debt: Some people get into the habit of using credit cards and can’t break the trend. Even though they know it’s the wrong thing to do, they continually spend. When you take into account a high rate of interest, it’s easy to see how credit card debt can quickly spiral out of control.

These are the types of things you should keep an eye on if you don’t like where things are headed with respect to your finances. If you’re unable to do anything about it on your own, it may be time to consider Chapter 7 or Chapter 13 bankruptcy.

For example, Chapter 7 bankruptcy allows you to discharge some or all of your debts, thus giving you a fresh start. It will impact your credit score, but at least you’re back to square one with regard to your overall financial situation.

If you’re interested in bankruptcy, compare the finer details of each type, paying close attention to the one that best suits your situation and future goals. Should you decide to go down this path, you can then follow the process outlined by the legal system. Soon enough, you’ll feel better about your finances and future.