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.
1. Medical emergencies
One of the leading causes of personal bankruptcy are medical expenses. Moreover, most of the people who end up declaring bankruptcy for this reason actually have medical insurance. In many cases, rare or serious diseases, or severe injuries often result in thousands of dollars of medical expenses. If your insurance refuses to cover certain treatments or you have a high deductible, you could end up on the hook for the bulk of the expenses.
2. Job termination
Layoffs, downsizing and demotions can quickly leave a household overextended. While some people might receive severance packages, a lot of individuals get their walking papers and nothing more with very little notice. Unless you have a substantial amount in your savings account to cover your expenses until you can get another job, you might find yourself suddenly overwhelmed with debt you cannot pay.
Divorce is another common reason why people find themselves in bad financial straits. Once you lose half of the household income and pay a divorce lawyer, you could already feel the pinch. When you subtract out half of your marital assets and the alimony or child support you have to pay monthly, things can become dire. Bankruptcy might be the only viable solution to get your finances back on track.
If you have found yourself in one of the above situations and you are overwhelmed with debt, keep in mind that you have options. You might be able to file for bankruptcy and regain control of your finances.