The leading cause of bankruptcy is outside of your control

On Behalf of | Jul 22, 2022 | Chapter 13 Bankruptcy |

If you are like many other ambitious professionals, you probably feel like your financial circumstances are among the things in life that you can directly control. You determine how much you put on your credit cards and how much you pay toward the balance owed on those accounts each month. You determine what you earn by how much you work and set the standard of living that determines your expenses.

It is common for people to assume that those who file for bankruptcy are largely irresponsible individuals. You might imagine someone who can’t stop buying designer handbags or gambling online. The actual leading cause of bankruptcy is something outside of your control.

Medical issues cause nearly two-thirds of modern filings

According to a recent review of bankruptcy proceedings in the united states, approximately 65% of the people involved cited medical issues or medical debt as their reason for filing. Even if you are financially responsible and have good health insurance, you never know when you could fall ill. For example, those who beat cancer are 2.5 times as likely as those without cancer to need to file for bankruptcy. There’s a reason the risk goes up so sharply.

New treatments may not yet have FDA approval and therefore will not qualify for insurance coverage. It could cost you hundreds of thousands of dollars to get immunotherapies or other cutting-edge care that could save your life. Unfortunately, when you get better, you will then have to worry about those massive medical debts.

How bankruptcy helps

When you file for bankruptcy, the courts issue a stay that will prevent future collection activity. If you complete the process and the courts approve your bankruptcy, you will be able to discharge the remaining balance on your unsecured debts, like your credit cards and hospital debts.

There are different kinds of bankruptcy available for people in different circumstances. A Chapter 7 filing could help those unable to work and with limited personal property quickly discharge their debts. A Chapter 13 bankruptcy can help someone with higher income or assets they need to protect from liquidation. Unlike so-called debt solutions, bankruptcy filings actually get to the heart of someone’s financial issues and can help eliminate their debt, in addition to ending stressful collection efforts.

Learning more about personal bankruptcy can help you regain control over your financial situation.