Most people who declare bankruptcy have run out of options. This decision is a serious one and should be carefully considered. Before filing, it is essential that you stop adding any new debt or taking out any credit cards. This can be deemed fraud and could delay or prevent your bankruptcy from being discharged.
Loss of Income
Loss of income is one of the most common reasons people declare bankruptcy. Often, this is due to losing a job or being laid off, but it can also be the result of unforeseen circumstances like a weak economy.
Medical bills are another top reason people file for bankruptcy. These expenses can quickly add up, especially if someone doesn’t have insurance or the costs aren’t covered by their current health plan.
Losing a home or other assets is another leading cause of bankruptcy. This can happen when homeowners are unable to afford their mortgage or when natural disasters strike and they lose valuable possessions like cars, clothes and furniture. Without these assets, it’s often impossible to pay other debt obligations.
High Medical Expenses
Medical expenses can take a huge toll on people’s finances and are a leading cause of bankruptcy. Serious illness or injury can cost thousands of dollars and eat up savings, retirement accounts and even home equity.
While a person can discard debts like credit card and personal loans during bankruptcy, it’s important to remember that they cannot clear alimony, child support and student loan obligations. Also, bankruptcy can hurt your credit score and make it difficult to get a mortgage or car loan.
Bankruptcy can be caused by everything from mismanaging finances to Americanswho are bankrupt because of health-care costs each year.
Unaffordable Mortgage
Keeping up with mortgage payments, property taxes and other costs that come with owning a home can be a major financial challenge. Many people are forced to declare bankruptcy when these expenses become too much to bear. This can have long-term effects and impact your ability to get a new mortgage in the future.
Buying a median-priced home today would require 35% of income, according to a mortgage data provider. That’s the highest percentage since 1984. Of course, the soaring home prices and mortgage rates have contributed to that crushing lack of affordability. But this is one of those situations where careful planning and savings might help avoid the need to declare bankruptcy. The good
news is, bankruptcy will only stay on your credit report for seven to ten years. Spending Beyond Your Means
Many people who file for bankruptcy have a hard time living within their means. This can be a result of putting things on credit cards or taking out payday loans.
Living beyond your means can also be a result of emotional spending, such as shopping or eating out when you are sad, stressed or worried. These types of purchases may make you feel better for a short period of time, but they can leave you with high debt and no savings.
Whether it is from overspending or having an unaffordable mortgage, living beyond your means can lead to financial disaster. Fortunately, there are ways to get back on track and avoid filing for bankruptcy. You can start by creating a budget and limiting credit card use.
Needing Assistance
In many cases, people declare bankruptcy because they have accumulated unmanageable debt. It can help them regain control of their finances and get on the road to financial stability, but it isn’t a quick or easy process.
A court takes a close look at your debts, income and assets to decide if you can pay back the money you owe. In a Chapter 7 bankruptcy, the court may liquidate your assets to pay creditors, but in a Chapter 13 bankruptcy, you can retain your property while working on a repayment plan.
If you are struggling with a mountain of bills, consider talking to Harrisburg PA bankruptcy lawyers. They have the experience and education to help you best with your situation. They can review your budget, suggest alternatives to bankruptcy and provide additional resources for getting out of debt.
