5 Common Reasons For Bankruptcy

You may be in a situation where you need to file for bankruptcy.  It can be frightening to think about, and you do not want to get yourself in that position. Many people who file for Chapter 7 or Chapter 13 bankruptcy do not understand the most common reasons for bankruptcy.  Over time, they find themselves unable to keep up with bills and payments due to unfortunate circumstances and struggle to get back on their feet.

Here are 5 Reasons for Bankruptcy in Colorado?

1) Medical Bills

Medical expenses are the most common reason for bankruptcy. You or your family member experiences an incident, such as a car accident, that causes damages and you could be left paying the bills. Diseases and other serious illnesses cause cost hundreds of thousands of dollars, and your insurance may not offer much help. These are examples of unexpected and unfortunate situations that can cost you nearly everything.

2) Job Loss

You might be laid off for a variety of reasons. However, you did not plan for any of it, and you have been left with no job and no way to pay your bills. Depending on your situation, you might not be able to get a job quickly or one that pays enough for you to catch up. This could leave you struggling living pay check to pay check and taking from savings accounts that you do not want to.

3) Poor use of Credit

Using a credit card can catch you off guard if you do not use it carefully. It can be easy to use it for larger purchases and put off making payments. Not making payment can cause your payment to get bigger as interest or late fees are added. Being cautious of what you purchase with a credit card and making monthly payments can help avoid financial consequences.

4) Divorce

A divorce can be time consuming and expensive. Attorney fees and splitting of assets could give you unwanted debts or payments. This can be especially true if you and your ex-spouse have co-signed loans or joint bank accounts. If you had put your career off to the side during your marriage, you might struggle with finances and finding work. This may result in filing for bankruptcy to help get you back on your feet.

5) Other Unexpected Spending

While medical issues are not something you can plan for other events like a natural disaster or freak accident, could set you back. A major storm such as a tornado or hurricane could cause serious home and auto damages. Having insurance can help in these situations, but it may not always cover everything.

Whether or not filing for bankruptcy is in your future, you can be aware of situations that could escalate to the point of bankruptcy. If you are considering bankruptcy and believe it is the best option for you, speaking with an attorney can help you make that decision and begin the process if necessary.