Why Do People File For Bankruptcy?

Numerous studies have shown that the most common reasons for filing for bankruptcy are:

  • job loss, followed by an inability to find work that pays nearly as well,
  • medical expenses that aren’t reimbursed by insurance or government programs,
  • divorce or legal separation,
  • small business failures, and
  • the foreclosure crisis.

Once a financial catastrophe strikes, many of us wind up having to take on significant debt just to weather the storm.

Why you shouldn’t feel guilty about filing for bankruptcy 

The American economy is based on consumer spending. Roughly two-thirds of the gross national product has come from consumers like us spending our hard-earned dollars on goods and services. If you ever had any doubt about how important consumer spending is to our economy, remember that immediately after the events of September 11, 2001 President George W. Bush urged Americans to resume spending.

In this age of billion-dollar bailouts for poorly managed financial institutions, should you really feel guilt ridden about the debts you have? That’s something only you can decide, but remember that large creditors such as credit card companies expect defaults and bankruptcies and treat them as a cost of doing business.

Bankruptcy is a truly worthy part of our legal system, based as it is on forgiveness rather than retribution. It helps keep families together, frees up income and resources for the care of children, and even reduces suicide rates. If you suddenly find yourself without a job; socked with huge, unexpected medical bills you can’t pay; or simply snowed under by an impossible debt burden, bankruptcy provides a chance for a fresh start and a renewed, positive outlook on life.

(In addition to all of the above, if you file a bankruptcy case you will find that you are in familiar company. Many respected, well known and successful people, places and things have been helped by filing for bankruptcy.) 

 

 

 

For answers to other questions you may have, feel free to visit the other pages listed under the "About bankruptcy" link. It's found at the top of every page on our site.