Consumer Bankruptcies Continue to Rise
If you think you may need to file bankruptcy, you’ve got lots of company.
According the Bankruptcy Data Project at Harvard University, during calendar year 2009, 1,016,105 individual Chapter 7 petitions were filed. In 2010, the figure climbed to 1,101,534. Most Chapter 7 individual petitions were filed by people who primarily had consumer debt. In a Chapter 7 bankruptcy, a debtor’s assets are liquidated and the nonexempt proceeds are distributed to creditors. With California’s unemployment crisis continuing, it seems likely the figure will continue to rise in 2011. The following are some common reasons people end up needing to file bankruptcy.
Catastrophic illness or injury can lead to unbelievably ridiculous medical expenses. A study done at Harvard University indicates that medical expense debt is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies.
As the saying goes, the bills won’t pay themselves. Most people do not have a large enough emergency fund to support them for an extended period of time while between jobs. Unemployment and severance pay (if you are lucky enough to get it) may keep a roof over your head and food on the table, but precious little is left for any other expenses, such as credit card bills that accumulated while you had a steady job. Even after finding a new job, many people are just too far behind to catch up.
Marital dissolutions can cause financial strain. Rather than pooling assets and income, the former partners must now support two households with the same income. Legal fees, alimony and child support payments can add to this strain. Filing a bankruptcy is a common way to eliminate community debts, so that the former partners can start new lives unburdened by old debt.
Ultimately, there are many reasons people file bankruptcy. If you are in financial crises, speaking to a local bankruptcy law attorney will help you to clarify your options.