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In many cases, bankruptcy is used by individuals who ended up in challenging economic situations through no fault of their own. By filing, they can either discharge or restructure debts that they cannot feasibly repay. This not only gives the individual breathing room by putting a stop to collections calls but also a means forward to become debt-free. The guide below looks at common times in one’s life that sometimes bring about these circumstances.

Why Do People File for Personal Bankruptcy?

1. Divorce

In many cases of divorce, one spouse is left with a significant financial burden. For example, some may be ordered to pay alimony and child support, while others may take on all the debt from the marriage. When these expenses are added to the legal fees associated with divorce, it can be difficult to keep finances in control.

2. Medical Bills

bankruptcyEven if you are healthy and insured, medical emergencies can cost a significant amount. Unexpected events can leave a person with high bills for surgery, hospital stays, ambulance transportation, prescription drugs, rehabilitation, and other health care costs. When these balances end up being higher than a person’s available income, personal bankruptcy can be a viable solution for debt relief.  

3. Unexpected Death

Death can leave surviving family members with a great financial burden. For example, individuals without life insurance may make their loved ones responsible for resolving debt balances and paying for end-of-life care. And if the deceased individual was the primary income earner in a household, it may also be difficult for the family to maintain everyday expenses without climbing into unmanageable debt.

4. Job Loss

From economic downfalls to corporate takeovers, there are many reasons why people may lose a good job. If they’re unable to find a replacement job that pays close to the same amount, the economic fallout can be significant enough to warrant bankruptcy.

5. High-Interest Debt  

When consumers first take out personal loans, auto loans, or new credit cards, they might have a financial situation that allows them to make their minimum monthly payments.

However, if the debtholder is unable to budget for higher payments or ends up having to request additional loans, they may find it increasingly harder to pay off the premiums—especially if they carry high interest rates.  

Many of these unsecured debts can be discharged or reduced with personal bankruptcy.

 

If unmanageable debt is jeopardizing your finances and your future, O'Connor, Mikita & Davidson LLC can help you explore your options for relief—including Chapter 7 and Chapter 13 bankruptcy. Closely familiar with bankruptcy law, these Cincinnati, OH, attorneys will review your situation in-depth and guide you through every step of the filing process. Visit the firm online to learn more about these services. To request a consultation, call (513) 793-5297.

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