Common Reasons People File for Bankruptcy
Americans face financial difficulties for many different reasons. While some financial hard times are temporary and resolve themselves, in other situations people require legal solutions to get back on their feet. The following are six of the main reasons why individuals or couples file for bankruptcy in the United States, as reported by our bankruptcy lawyers in Phoenix.
1. Medical bills. Media reports indicate that medical debt due to illness or injury is the leading cause of bankruptcy in the United States. Even if individuals have health insurance, the cost to treat serious conditions may easily exceed policy limits causing overwhelming medical debt.
2. Unemployment. It is no surprise that unexpectedly loss of a job causes people to file bankruptcy. Unemployment benefits are often not enough to cover household expenses and, if you are unable to find a new job in a timely fashion, you may have to rely on credit cards to cover expenses or may fall significantly behind on bills.
3. Credit card debt. Credit card companies have many practices that make it difficult for people to even afford a minimum payment. Fees for going over your limit or paying late can be $39.00, plus companies may raise your interest rate over 30 percent if you fail to make a payment. In such situations, your balance can grow extremely quickly and minimum payments may not even make a dent.
4. Predatory lending. If you were the victim of a predatory mortgage lender, you may be unable to make your mortgage payments. Bankruptcy is one way that victims of fraudulent or predatory lending practices can overcome this situation.
5. Collectors. Anyone who has had a bill in collections should understand how stressful the daily calls and regular letters may be. If you have several bills in collections, you may spend most of your day simply evading calls from collectors and bankruptcy is often the fastest way to make the harassment stop.
6. Garnishments2. If a creditor obtains a judgment against you, you may suddenly find your wages garnished as a result. If you had trouble paying your bills before, receiving lower wages will only make your situation worse and may lead you to file bankruptcy to stop the garnishment and discharge your judgment.
If you are considering bankruptcy for any reason, call the Ellett Law Offices in Phoenix at 602-235-9510 for assistance today.