If you are like many Americans, you may be struggling with overwhelming debt and overwhelming guilt about falling behind financially. You may feel that filing for bankruptcy would be a sign of personal failure and that you have no good options for moving forward while continuing to support your family.
However, most personal bankruptcies happen due to unexpected and/or uncontrollable circumstances. Far from being financially irresponsible, bankruptcy may help you to rebuild your savings, credit and peace of mind after a major life event.
1. Medical expenses
A 2019 study by the American Journal of Public Health found that roughly 66% of U.S. bankruptcies occur due to medical care costs. Even with insurance, a serious injury or illness may mean that you must take time off work to recover in addition to paying potentially steep bills for treatment.
2. Job loss
The sudden loss of a job or loss of hours can mean you have you figure out how to continue paying the bills while searching for a new position. Without a sizeable emergency fund and without health insurance, you may find that your families’ expenses are spiraling out of control.
3. Divorce or separation
Even if you separate on relatively good terms, divorce can have an enormous impact on personal finances. Depending on the court’s decisions about dividing assets and providing child or spousal support, you may need to completely rethink your budget following divorce.
State and federal bankruptcy laws exist for good reason; to help American families escape crushing debt and rebuild their lives. If you are facing overwhelming debt, know that filing for either Chapter 7 or Chapter 13 bankruptcy may help you to find the fresh start you need to recover after a major life setback.
