A recent study came out with the top 5 reasons that push people to filing bankruptcy. There are not many surprises on the list except for the fact that the idea that medical debt can drive you to bankruptcy shows why our current economic system is unsustainable. A healthy population can only make America more productive. Unfortunately, Wall Street has found a way to get rich off of people's poor health. With that said, here are the top 5 most common reasons why people file bankruptcy in America today:
1) Medical Bills: Medical expenses are the driving cause behind nearly two-thirds of all bankruptcy filings. If you think this is only for the uninsured then you would be wrong. This group includes significant amounts of consumers that have health insurance. But with rising premiums, high deductibles, and copays, people that experience significant medical conditions are faced with bills that are simply unpayable. The study also found that many people use their savings or home equity to try and pay these bills to avoid bankruptcy. You should never use your nest egg to pay medical bills because the statistics show it probably won't prevent a bankruptcy. Save your money and file bankruptcy early instead.
2) Job Loss: This one seems more obvious. Losing a job, especially a good paying job can be difficult for anyone or any family and it is a contributor to bankruptcy. The fact that medical bills ranks higher than job loss shows how broken the system is.
3) Too Much Debt: This one seems like a catch all and I think the authors of the study need to explain themselves better. Corporate propagandists paint people with too much debt as irresponsible. However, how much of that debt is related to things like medical bills or necessary expenses like childcare? My guess is that carrying too much debt is closely related to medical bills and job loss. But, if corporations can paint people as irresponsible than they can continue rigging the system with the public's consent.
4) Divorce or Separation: This one is also self-explanatory. Nothing will destroy a family financially faster than a divorce or separation. The costs associated with divorce is high, both personally and financially. Legal bills, child support, new bills, old debts, its not good.
5) Unexpected Expenses: Think about major catastrophic events like bad car accidents when there is no insurance or flooding or damage to home that also isn't covered by insurance. Considering that the average American consumer doesn't even have $500 of savings, it is impossible to deal with and prepare for such unexpected expenses.
Bankruptcy can be a difficult conversation for anyone. However, we have found that when done strategically it can be the most powerful and effective way for consumers to stay afloat in a difficult economic system. If you are thinking about bankruptcy, don't read about it on the internet, where corporate propagandists plant most of the disinformation. Call us for a free consultation and we will tell you the truth about your situation.