This post is the third in a series about the most common causes of personal bankruptcy. In the first post medical expenses were identified as the cause for the most bankruptcies in the United States. The second post recognized job loss and unemployment as the second most common cause of bankruptcies. In this final segment we will discuss the third, fourth, and fifth most common causes of personal bankruptcy.
Out-of-Control Spending
This cause of bankruptcy is perhaps the most embarrassing. What’s worse, it advances the misconception that people who declare bankruptcy are irresponsible shopaholics. However, people in this group usually get into financial trouble through no fault of their own. Out-of-Control-Spending can be caused by any of the other four financial situations!
For example, a person is living on an extremely tight budget due to one or more of the other four situations. Suddenly their car breaks down but they need it to drive to job interviews or medical treatments. The only way to pay for the repair bill is to use a credit card. Then winter comes, and they don’t have enough income to pay the heating bill, so they use a credit card to cover that expense. As cash becomes tighter they turn to their credit cards to buy fuel and groceries. Before they realize it they’ve maxed out their credit cards and the amounts due plus interest are beyond their financial means.
Divorce
Most couples rely on a two-person income. But when a divorce occurs, their income is cut in half. And on top of that, they have hefty legal fees from the divorce.
Disasters
Hurricane Sandy demonstrated how powerful and destructive nature can be. Thousands of people suddenly faced having their homes and businesses destroyed, instantly making them homeless and unemployed. For many of these people it will take many months to receive the insurance benefits resulting from their claims. Even after receiving their money it will take longer to rebuild and reestablish their homes and businesses. Although many are receiving state and federal financial assistance, the severity of the damage and length of time it will take to return to “normal” will cost more than they can afford. For many of these folks a bankruptcy may be required to gain a fresh start.
Getting Legal Help
If you are in a position where you need a credit card to feed your children, you are facing desperate circumstances and you may need to call a Minnesota bankruptcy attorney. Call Stephen Behm at Behm Law Group, Ltd. Bankruptcy is not without its consequences. In particular, a bankruptcy filing will have a negative impact on your credit rating. However, bankruptcy can be the first step toward getting a fresh start and getting one back on one’s financial feet. Even though you may have a bankruptcy on your credit, you will likely be more credit worthy after a bankruptcy filing than you were before. The reason for this is that all or most of your debts will be discharged through the bankruptcy and new creditors with whom you consult later will see that they will not have to compete with old creditors to get paid. If you want a fresh start, contact Stephen Behm at Behm Law Group, Ltd.
