The decision to file for bankruptcy is an important decision in one’s life that shouldn’t be taken lightly. Some people wonder how they got to the point of contemplating bankruptcy and some are unsure about whether bankruptcy is right for them. Not everyone who files for bankruptcy has had the same financial journey.

Here are 5 common reasons why people file for bankruptcy…

1. Insurmountable Medical Bills. Medical bills are the number one reason why people file bankruptcy. Perhaps someone in your family had a major medical procedure or perhaps you have had several small medical bills. Serious medical issues can quickly result in hundreds of thousands of dollars in medical bills, even if there was insurance coverage. No matter the reason or manner in which they were accumulated, medical bills can pile up and become overwhelming. Bankruptcy can discharge your medical debt and give you a fresh start.

2. Unemployment. Many individuals who lose their job are unable to find replacement work in a timely fashion and thus, can no longer pay the debts they previously were able to pay.

3. Lack of Budgeting and Financial Planning. Sometimes people find themselves having spent beyond their means. Perhaps you were never taught what a budget is or how a budget works. This can lead to making less than ideal financial decisions. Over time, car loans, credit card bills, and other payments can add up, and before you know it, you may find yourself unable to pay your monthly bills. To make matters worse, you also may not be qualified to borrow funds or get a consolidation loan. Filing for bankruptcy can be an option for relief and potentially make those bills go away.

4. Credit Card Bills. Credit cards are a primary reason why people file for bankruptcy.  There may be many reasons why you have credit card debt such as getting a divorce, losing a job, or getting sick. If you can’t pay your credit card in full every month, interest and sometimes late fees accumulate. Both of these add to your overall debt. And ultimately, when the credit limit is reached, your credit card company might increase that limit and put you at risk of becoming further indebted. Bankruptcy is a way to get rid of that credit card debt and start anew.

5. Student Loans. Student loans are very unlikely to be eliminated in a bankruptcy proceeding. Still, getting rid of other debt by way of a bankruptcy will put you in a position where you may be better able to afford making your student loan payments.

This is not an exhaustive list of the top reasons why people file for bankruptcy.  BUT- this list demonstrates that if you are considering filing for bankruptcy, you are not alone. Many people find themselves in one or more of the above described circumstances and for many, bankruptcy is an option to start anew.  If you find yourself in any of these circumstances, we are here to help you and to educate you on your options.