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3 Top Reasons People File for Bankruptcy

Bankruptcy is a term that can come with a stigma. You may feel uncomfortable or guilty if you are considering bankruptcy. However, going into bankruptcy can be a chance to start over and does not have to be a blemish on your reputation.

If are worried that declaring personal bankruptcy will automatically be a stain on your character, do not be. There are a lot of reasons to file for bankruptcy other than irresponsible spending. Here are some common reasons that people seek a fresh financial start through bankruptcy.

1. Losing a Job

Job loss may happen without warning. If you lose your occupation, it is not always easy to find another one. You may need to relocate or get re-training to land another job, both of which can deplete your emergency funds. Losing a job is especially detrimental if you have children starting college or you recently purchased a car or home. If you lose your job, you may also lose your health insurance, which can make matters even worse.

2. Medical Costs

According to the Huffington Post, a sudden medical expense is one of the top reasons people file for bankruptcy. If you suffer a severe injury in a car accident or contract a disease, it can turn your entire life upside down, including your finances. If you accrue a lot of medical debt, it can be almost impossible to get out of it without bankruptcy.

3. Ending a Marriage

Getting a divorce can mean living on half of your income. It is hard to try and maintain your same lifestyle after a divorce. Unanticipated expenses of a divorce can sneak up on you and drive you into debt. This is especially common because there are usually existing financial problems in a marriage that divorce only exacerbates.

Just because you file for bankruptcy does not mean you are a reckless person. Bankruptcy can sometimes be the best way to start over financially.