Causes of Bankruptcy
Bankruptcy is still a frightening and embarrassing situation for many people. The dictionary doesn’t help when it gives definitions like: “utter ruin, failure, depletion”. No wonder so many people won’t consider bankruptcy until it’s the last resort.
What is bankruptcy?
Simply put it’s “being legally insolvent” or an “inability to discharge all your debts as they come due”. Bankruptcy isn’t the cause of debt, it’s the result.
What causes bankruptcy?
Is it simply living beyond your means, or spending indiscriminately more than you make? No. Though that may be true with some - such as celebrity lifestyles - for many, it’s much simpler and beyond their control. There are many outside factors which contribute to bankruptcy.
Common causes of consumer bankruptcy are:
• Medical expenses
• Unemployment
• Accidents
• Business failure
• Divorce
• Ballooning interest rates
The foreclosure crisis has lead more and more people to file bankruptcy as finance and credit card companies lure consumers in with attractive interest rates and low or no down payments. What many didn’t realize was how much payments would rise when the interest rate adjusted after the introductory offer. These types of lending strategies are prevalent enough to be given a name, “predatory lending”.
With such tactics, and other involuntary circumstances, you may find yourself with no other options. Bankruptcy offers hope and help. Bankruptcy is a way to get out of that overwhelming debt. Not all debt disappears with bankruptcy, though; it’s not a cure all. Depending on the type of debt and the type of bankruptcy you file, bankruptcy can eliminate much of your debt and get you back on financial track.
It is vitally important to speak with an experienced bankruptcy attorney about your options if you’re considering bankruptcy. With the changes in bankruptcy laws, you need to have professional advice. Most bankruptcy lawyers will evaluate your case for free. If you’re facing bankruptcy, you have nothing to lose in consulting a bankruptcy attorney.
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Please fill out our free evaluation form to determine if bankruptcy is right for you.
