Reasons for Filing Bankruptcy

 

Bankruptcy is a declaration of inability of an individual to pay creditors. People file bankruptcy as a last resort. When one files for bankruptcy, it will stay on his record for ten years. The following are reasons why people file for bankruptcy

 

1. Unemployment

 

Unemployment is one of the most common reasons why people file for bankruptcy. During unemployment, no cash flows into the household, and the individual would have difficulties paying for basic needs. He would not be able to pay his creditors.

 

2. Minimum Wage Earnings

 

Some individuals have low income that are not even enough to pay for their basic needs such as food, clothing, household expenses like electricity, water and phone bills. Because of this lack of money, he would also have difficulties allocating money to pay for his other bills, which would make him think of filing for bankruptcy to relieve him of some of his obligations.

 

3. Hospitalization expenses

 

Unexpected things may happen to anyone. The cost of medical care nowadays has skyrocketed that even the simplest of diseases would set back an individual at least several hundred dollars. Serious diseases such as cerebral-vascular diseases like stroke and aneurysm, heart diseases, different types of cancer and others that may require expensive high-technology diagnostic procedures, operations, and medications would definitely cause a dent in an individual's savings, no matter how high his income bracket is.

 

4. Marital Problems/Divorce

 

Some people who are undergoing marital problems and contemplating on filing divorce consequently plan to file for bankruptcy. Money is among the most common stress factors in relationships, and some think that the answers to their money problems would be divorce and bankruptcy. One must remember that filing for bankruptcy does not relieve him of alimony or child support obligations, though.

 

5. Evading payment

 

Some people file bankruptcy just so they can get out of paying their creditors. While some are actually able to do this, it is a rough road and one should establish that he really deserves to file for bankruptcy.

 

6. Large Credit Card Debt

 

Some spend like there is no tomorrow, buying expensive things they do not really need, and paying for them using plastic. Before they know it, they are heavily indebted to credit card companies, and they file for bankruptcy to relieve themselves of some of their obligations.