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Boca Raton Bankruptcy Lawyers

What Causes People To File For Bankruptcy?


There are a lot of misconceptions about bankruptcy, but one prevailing one, is that people who file for bankruptcy are somehow irresponsible, or that they cause their own financial problems. However, that is not what the research bears out. In fact, more and more research and studies show that bankruptcies are most often the result of unavoidable life events.

No Cause Needed

Before discussing the cause of bankruptcy, remember that you do not have to show the bankruptcy court why you are filing for bankruptcy. You do not need “cause” to file for bankruptcy, and so long as you aren’t committing fraud (for example, you ran up thousands of dollars in luxury items a month before you filed for bankruptcy), the court generally won’t pass any judgment on you, when it comes to what lead you to file.

Medical Bills and Related Expenses

An incredible number of people in one study said that medical bills and expenses were the leading cause of having to file for bankruptcy. In fact, over 2/3 of the people studied cited medical expenses as causing their bankruptcies.

Remember, medical expenses may include the actual medical bills, but can also include the things that medical debt causes—for example, if you have a lot of medical debt, it’s likely you had a medical condition or injury that also caused you to miss work, thus making a bad financial situation even worse.

Not all of these individuals are uninsured. Many people find themselves in a position of paying huge amounts of money for health insurance (money that can’t be used to pay other creditors), but still having a policy so poor that they still incur medical debt.

Foreclosure & Other Life Events

A large percentage, about 40%, cited foreclosure as why they filed for bankruptcy. Chapter 13 can allow you to work out a plan to keep your home, but even if you have to or want to leave it, bankruptcy can ensure that you do so owing no money.

Student loans and divorces both were high indicators of bankruptcy as well. Other reasons found were home repairs, for damage to homes that were not covered by insurance. Problems with cars can lead to high bills as well—in fact, like medical bills, car trouble can be a double-problem: the cost of the repairs, and being unable to get to work while the car is broken or being repaired.

Living Too Extravagantly?

It is true that some people simply live beyond their means, but that is a subjective term. Is someone who needs a new washing machine, and who has to charge the expense on a credit card, living beyond his means? There are a lot of life expenses that may seem like “frivolous purchases,” but which are actually life necessities.

It doesn’t matter why you need a bankruptcy. We can help. Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 today.




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