Three Commonly Overlooked Causes of Bankruptcy in the US

The list of reasons for bankruptcy in the United States extends well beyond credit debt accumulation. Though credit debt may accumulate due to unexpected expenses, it is those same unexpected expenses that drive up the debt in the first place. Most people who file for bankruptcy have a history of responsible debt payment. However, the unexpected event can drain the resources of any person, no matter how responsible they have been when paying the debt. Those who find themselves in an unmanageable debt payment circumstance should look at this website for possible answers to their dilemma. Of all the reasons to file bankruptcy in the United States, these three are the most common.

Medical Expenses

Nearly a quarter of American citizens struggle with medical bills. A problem unique to the American economy, medical bill bankruptcies, nearly 40% of Americans built more debt in 2014 due to medical expenses. The accumulation of debt does not appear to be dependent on if the consumers have medical insurance. Some are new parents with newborns in need of intensive medical treatments. Others are sudden victims of chronic illnesses such as cancer or diabetes requiring ongoing expensive treatments. In the end, the cause of medical debt is irrelevant as the cost empties savings and cause loss of homes, cars, and (at times) domestic partners. The medical cost bankruptcy increases through the last few years tie significantly with the dissolution of families.

Reduced Income

Since 2005 many corporations have reduced wages, bonuses, or hours to compensate for economic downturns. That practice turned into a common management tactic to lower cost and increase dividends. Some employees experienced small increases in wages, while others were not granted any wage increase at all. During the same time, medical insurance premiums increased at a rapid rate resulting in a loss of income for employees as more of their wages went to cover insurance premiums. 

The reduction of wages, either through intent or inadvertent circumstance, resulted in a change in the demographics involving bankruptcy filings. Where abuse of credit had formerly been the second most prolific reason for bankruptcy, the gradual decrease in income, took its place in 2005 and has maintained that place in spite of dividend increases for stockholders. The economic “boom” that occurred did not occur for workers, only for stockholders.

Job Loss

Losing a job and not finding another immediately causes economic strife within a family unit. Most households are dependent on income to maintain the standard of living to which it has become accustomed. This does not mean that people are living extravagant lives. However, small things, once taken for granted like upkeep and improvements suddenly become an unmanageable extravagance. Later, as the situation continues and with savings depleted, debts become a major issue. The pattern of debt accumulation became a prevalent social phenomenon during and after the 2008 financial crisis.

For most people, the only way out of crippling debt is through bankruptcy. Most people who file for bankruptcy are victims of economic downturns. Through no fault of their own, they turn to bankruptcy lawyers to find relief.

Media Contact
Company Name: Bright Bankruptcy Attorney Firm
Email: [email protected]
Phone: (713) 714-2999
Country: United States
Website: http://www.brightbk.com/houston-bankruptcy-attorney-firm/