Common Circumstances that Can Lead to Bankruptcy

Many people mistakenly believe that filing for bankruptcy is a sign of financial irresponsibility or trying to get “free money.” As experienced bankruptcy lawyers in California, our legal team knows that this is simply not the case. While some bankruptcy cases do result from poor spending decisions, there are many other reasons that people in the United States file for bankruptcy that should not come with a negative stigma. 

Medical Debt

Everyone knows that the costs of healthcare in the U.S. are outrageous and consistently rising. Even with health insurance, treating a relatively minor injury or illness can result in a pile of medical bills. When you or a family member suffers a severe illness or injury, it can require months of extensive medical treatment and tens or hundreds of thousands of dollars in expenses. To make matters worse, if a primary household earner is the one with the condition, they may not be able to work during treatment, which can only make the situation worse.

Unemployment

Suddenly losing your job can wreak havoc on your household finances. Experts suggest it can take up to one month to find a new job per $10,000 of salary you are seeking. This means it can take about seven months to find a position earning $70,000. Even if a job search only takes weeks, you can quickly fall behind on your bills and have to rely on credit, loans, and other debts to make ends meet during this time. This debt can snowball, causing your financial situation to quickly get out of control.

The Failure of a Business

If you own a sole proprietorship or general partnership, you are personally liable for the debts of your business. When the business fails, creditors can come after your personal assets and property, and you may not be able to cover the debts without losing everything. Bankruptcy can help resolve the matter so you can clear the business debt and move forward while still maintaining as much as possible.

Misunderstanding of How Credit Works

Many young people – or older adults – simply do not understand how credit works. This is something that is often not addressed in school or by parents, and the idea of buying what you want with a credit card can be tempting. When credit companies lend to people who have little to no credit experience, cardholders can quickly max out their cards with high-interest rates, unable to cover even the minimum balances in many cases. 

Consult with a Dedicated Bankruptcy Lawyer in Monterey and Salinas, California

The above are only some of the many possible reasons that you may consider filing for bankruptcy for debt relief. Every situation is unique, and you should have a trusted attorney to review your financial circumstances and help you determine how bankruptcy may help. The law firm of Miranda, Magden & Miranda, LLP helps clients in many different situations, so please do not wait any longer to contact us and set up a consultation today.