Bankruptcy: The Who, What, and Why?
Bankruptcy is a problem that affects people from all walks of life for a variety of different reasons. Sometimes it is attributed to mismanagement of finances or excessive spending, while other times it is due to circumstances beyond control.
The most common reasons people fall into bankruptcy include the following:
- Medical expenses. There is no doubt that health care is expensive, and injuries and illnesses can quickly add up to hundreds of thousands of dollars owed. This also pertains to individuals with reasonable health care plans. Not only do medical bills amass quickly, but those who are unable to work due to illness or injury face even greater risk of bankruptcy.
- Job loss. Job loss results in either termination of benefits or expensive COBRA premiums. This adds to the potentially crippling responsibility to afford housing, utilities, and other every day living expenses.
- Separation or divorce. When couples separate, they no longer share costs of living. They may also be burdened with attorney retainer fees and other legal costs. The division of assets and debt, and the allocation of child and spousal support are also contributing factors.
- Unexpected circumstances. Tragedies such as natural disasters are generally unforeseen. They may result in loss of income, injury, and extensive property damage. Many victims of these situations are uninsured or otherwise unable to compensate for their losses.
Over the years, researchers have identified trends regarding bankruptcy filing. They have found that the “average” filer has a high school education, is married, and earns less than $30,000 per year. Due to rising student loan debt, however, experts predict that college graduates will be a growing demographic filing in the near future.
Although bankruptcy is not a circumstance in which most people plan to find themselves, it can be a useful tool. For more information, contact Brock & Stout today.