What are the most common reasons Americans file for bankruptcy?
A new study sought to examine the reasons that most often drive Americans to bankruptcy. Each year, roughly 800,000 people across the U.S. declare bankruptcy. For most, bankruptcy is thought of as a last option. Bankruptcy is usually only pursued after other efforts to eliminate one’s debt have been exhausted. Most people, if asked what leads others to declare bankruptcy, may cite poor spending habits or excessive shopping. However, the reality is that the number one cause of bankruptcy could happen to even the most frugal among us. Our Xenia, Ohio bankruptcy lawyers explore the most common causes of bankruptcy below.
Medical Issues Lead to Two-Thirds of All Bankruptcies
In a study published by academic researchers in the American Journal of Public Health States, it was found that medical issues continue to be a top cause of bankruptcy. Medical bankruptcies persist despite implementation of the Affordable Care Act, which sought to reduce the cost of healthcare and make health insurance affordable for more Americans.
The study found that 66.5 percent of all bankruptcies are linked to medical issues. Medical related bankruptcies stem not just from direct medical debt, but also from the debts that are associated with a serious medical illness. A major medical illness can cripple a family, hindering the ability of the primary breadwinner from making income and zapping the family of resources as they struggle to stay current with the many hospital, doctor’s office, and prescription drug costs.
Other Top Causes of Bankruptcy
Along with medical issues, there are numerous other reasons why Americans may find themselves in need of filing for bankruptcy. Another common cause of bankruptcy is an unaffordable mortgage or foreclosure. With rising housing costs nationwide, many homeowners are finding themselves spending too much of their salaries on their mortgage. Living beyond one’s means is another top bankruptcy cause, as is loaning money to friends or family. Student loans are bankrupting millions nationwide, and remain difficult if not impossible to eliminate in bankruptcy. Divorce or separation can also leave many couples floundering financially, potentially leading to the need to file for bankruptcy.
Anyone who is struggling to stay abreast of their debts should take action. Contact a bankruptcy lawyer to find out whether bankruptcy may be a viable option to get you back on your feet.