You never thought you’d go bankrupt. You always tried to be smart with money. You tried to avoid common pitfalls. You scoffed at people who made obvious mistakes.
That’s why it feels so strange to find yourself sitting in your car in the driveway, thinking about whether or not you need to find out more about the bankruptcy process. You just can’t shake the feeling that it’s your best option, but that doesn’t mean you expected it.
A lot of people don’t. In addition, many reasons that bankruptcy strikes aren’t even really your fault. That’s a common misconception. You may not have made any financial mistakes, but here you are. Don’t let that stop you from trying to create the best possible future for you and your family.
Below are five of the top reasons people file for bankruptcy:
1. Income reductions
You were counting on that bonus, but the company struggled this year. Your boss cancelled the bonus. Maybe he even cut your hours back from 40 to 25. You’re still employed, but you’re not earning nearly what you hoped.
2. Lost jobs
Perhaps it’s even worse than that. The company decided to downsize and fired you. It’s not your fault. You just didn’t have any seniority and someone had to go. You worked as hard as you could for as long as you could, but now you have nothing to show for it.
3. Medical bills
You never plan to get sick. You don’t plan for it to be a life-threatening illness that puts you in the hospital for six months. Now you’re looking at medical bills you don’t think you can pay off for the rest of your life. Medical care is ridiculously expensive in the United States, but you had no choice but to take it. Now you’re swamped in debt.
4. Unplanned events
Life gets expensive in a hurry. One little mistake at a red light and you total your car. One harsh storm and a tree falls on your house. One accident at school and your child is the one who needs medical care. Any little thing can set off a chain reaction of events as your finances spiral out of control.
You try to keep the marriage afloat, but your spouse won’t hear it. He or she files for divorce. As assets get split up and living expenses increase, you suddenly know that your carefully-planned-for future is gone. You’re in over your head, financially and emotionally.
Maybe your situation is different, but these bankruptcy examples do help to break down the myths and show you why bankruptcy can strike without warning. If this happens, it’s important to fully understand your legal options.