Bankruptcy has become more common than ever in today’s world. There has been a dramatic rise in the number of people who are unable to pay off their debts. Whenever you hear the word “bankrupt,” you may think of the person as someone who does not know how to handle their finances. However, there is much more to it than what seems.
There are many ways people can go bankrupt. Even if you are careful with money, you can still encounter a life-changing situation in life that forces you to go bankrupt. Thankfully, there is a way to get out of it. To understand whether you have a case, contact a bankruptcy lawyer in Katy today.
Top reasons people go bankrupt
- Medical expenses.
Healthcare is some of the most expensive things in Katy, USA. A study conducted by Harvard University showed that 62% of all bankruptcy cases are filed because of medical expenses. Moreover, 72% of the people who filed for bankruptcy due to medical expenses had healthcare insurance. Therefore, it removes the misconception that only financially irresponsible people go bankrupt.
- Job loss.
The stability of many jobs is uncertain. Your employer can terminate you anytime, and you can lose your source of income without being able to do anything about it. Some are lucky to receive a warning or at least a hint, but it is mostly a surprise for others.
Things can get even worse when you do not have emergency savings to use. When people are unable to find employment for a long period of time, it can become impossible to pay their bills. Thus, they eventually go bankrupt.
- Poor or excess use of credit.
While people can go bankrupt for various reasons, poor and excessive use of credit is still among the common ones. When you cannot control your spending, you are likely to face bankruptcy. You must spend money according to your income. It is important to ensure that you have enough left to pay for your basic necessities, car loans, rent, etc.
- Divorce.
Almost all divorces can take a financial toll on one or both spouses, with or without attorney fees. During a divorce, the division of assets can leave you financially drained. Moreover, the division of debts adds to the problem as you need to pay bills that are not even yours. When you add attorney fees to it, a divorce can easily cost over $10,000.
- Unexpected expenses.
Unexpected expenses include loss of property due to accidents, theft, or natural calamities such as earthquakes, floods, etc. People who do not have coverage for such losses have to pay for the damage out of pocket.