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3 common reasons people declare bankruptcy

If you have had trouble making ends meet recently, you are not alone. You probably have friends, family or neighbors in Rochester with similar problems. While some people continue to struggle and can never quite get ahead, others choose different methods to get their debt under control. For instance, a few credit counseling sessions might be enough for one person, but for another, bankruptcy might be more effective.

Many people consider bankruptcy to be something that should be avoided at all costs. However, there are many benefits to declaring bankruptcy such as automatic stays, which can stop creditors from coming after you or put a hold on foreclosure proceedings. But, how do people end up in a situation where bankruptcy is necessary? Here are some common causes of bankruptcy.

When is Chapter 13 bankruptcy the right option?

When people think of bankruptcy, they often conjure up images of someone who is too old or sick to work. While it is true that Chapter 7 bankruptcy has specific protections for those who have lower levels of income and fewer overall assets, that doesn't mean that only people in dire financial straits or who don't have jobs need the protection of bankruptcy.

In fact, those who work high-profile and high-paying jobs can often find themselves overwhelmed by debt. After all, you probably need a car, wardrobe and home that is comparable to those of your peers. The more you make, the more debt you may find yourself carrying at any given time. Even those with substantial assets and income may require the protection of Chapter 13 bankruptcy proceedings.

Don't be scared of bankruptcy: It can help you

Bankruptcy is sometimes difficult to consider, especially when you've worked hard for everything you own. You might be considering bankruptcy because of an expensive medical emergency or because you lost your job.

Whatever the cause, the reality is that bankruptcy can be a valuable option. Unlike what many myths suggest, you won't lose everything when you file for bankruptcy. People who opt to go through bankruptcy have exemptions open to them, which make it easier to keep the items you need, like your primary vehicle, home and other key assets.

Ideas for saving money for a rainy day

You may have heard that factors beyond a person’s control like job loss or unexpected medical bills are often the cause of bankruptcy. While many Americans survive paycheck to paycheck, you should do anything you can to prepare for a rainy day.

A financial hardship doesn’t have to be something as catastrophic as losing your job or a hospital stay; a surprise car repair bill or having your hours reduced at work could affect your livelihood. Having an emergency fund in situations like these immensely helpful because it means you can manage your bills better without using credit or making installment payments.

A quarter of Americans expect to die with debt

Debt follows you wherever you go and according to a new poll from, 25% of Americans expect their debt to follow them to the grave. There was also 65% of participants who don’t know if or when they pay off their current debt.

The poll only highlights the sad reality that many Americans deal with – living with debt without a chance at recovery. Luckily, the survey also found 35 percent of Americans expect to be free from their debt.

Spent beyond your means? Bankruptcy could be a solution

As you get older, it's normal to find that you have more money to spend. You may pay off your mortgage and have money to blow thanks to low credit card debt and few other expenses. However, if you continue to live this way after retirement, you could find yourself struggling in the future.

Aging persons can make some simple mistakes that place them at financial risk. Some may choose to sell a home that has been paid off for their "dream home," even though they're no longer working. Others rack up credit card debt thanks to high limits and the anticipation of receiving a monthly check.

Medical bills are pushing Americans towards bankruptcy

Life is expensive. Between the cups of coffee we drink every morning to the annual checkup we have with our physician, we are constantly forking over money to keep our lives moving forward. However, all those costs add up and make it difficult to continue maintaining specific expenses.

For example, costly medical bills quickly put families in a financial situation where they can’t maintain daily conveniences or mandatory payments, such as rent or mortgage. It forces more Americans to find alternative ways to repay their medical bills, including bankruptcy.

Bankruptcy increases in older generations

Throughout the last decade, the American economy bounced from the most significant financial depressions in 2008 to one of the most profitable days in the DOW's history in 2018. But what effect has this shift had on older Americans?

Unfortunately, a recovering economy does not necessarily mean improvement for everyone. According to the Economist, the portion of all bankruptcy filings "made by people over the age of 65 has climbed from 2 percent in 1991 to 12 percent between 2013 and 2016."

Why are credit cards necessary after bankruptcy?

Filing for bankruptcy often feels like a massive defeat because you cannot solve your outstanding debts by yourself. You have to use bankruptcy as a way to alleviate the stress of creditors and credit cards bills piling up at your door.

But bankruptcy is not a defeat rather a great first step in rebuilding your credit score and bringing stability to your finances. Once you finally pay off your debts, you should reconsider incorporate credit cards back into your life in a responsible manner.


Peter R. Scribner, Esq.
1110 Park Avenue
Rochester, New York 14610

Phone: 585-800-9616
Fax: 585-256-6462
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