As of July, more than 450,000 Americans have filed bankruptcy in 2018.1 While bankruptcy filing rates have started to fall, many citizens are still finding themselves in so much debt that there’s no way to pay it all back. These are some commonly overlooked causes of debt that lead to bankruptcy.
Medical Costs
If you or a family member has recently undergone treatment for an illness or had a major surgery, it’s highly likely that insurance won’t foot the entire bill. In a life or death situation, you won’t be shopping around for the cheapest treatment. Unfortunately, this often results in overwhelming, unexpected medical debt.2
Inflation
Many people don’t realize how much the cost of living goes up each year. The combination of growing housing costs, rising food and gas prices and lack of an annual raise to offset these increases will lead to more debt as people raid their savings accounts and overuse their credit cards to cover their expenses.
Lack of Insurance
Neglecting to purchase adequate insurance – or any at all – can create serious financial problems. If you get in a car accident or your home is burned down in a fire, the out-of-pocket costs will be considerably larger than if you had insurance to help pay for repairs.
Identity Theft
According to Javelin Strategy & Research, an estimated 16.7 million Americans had their identities stolen in 2017. Their financial losses amounted to about $16.8 billion.3 Although the debt was racked up fraudulently, you could still be on the hook to repay it depending on the circumstances of the fraud.4
Living Above Your Means
Living above your means is one of the many habits that can saddle you with debt. If you’ve got a taste for the finer things in life or keep up with every latest trend without the disposable income to make that rate of spending feasible, you’ll probably find yourself in debt before long. Spending more money than you make is a surefire way put yourself on the fast track to bankruptcy.5
Lack of Financial Knowledge
Financial education isn’t accessible to many people, so those without that foundation often rely on credit cards and high interest loans. Financially savvy people know this is unwise, but others simply don’t understand how these poor decisions can affect them down the road.
Poor Investments
Many people invest instead of paying off their debt in a misguided attempt to make money quickly. They hope that they can turn a profit and get out of debt faster. Unfortunately, these people often end up losing everything and taking on even more debt.
Consumer Bankruptcy Attorneys in Orlando, FL
The bankruptcy attorneys at Bartolone Law have helped Florida clients get a fresh financial start by exercising their right to file Chapter 7 and Chapter 13 bankruptcy. We help the members of our community escape the burden of debt by helping them fully understand their options. Receive your FREE initial consultation by calling 407-294-4440 today!
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1 https://www.abi.org/newsroom/bankruptcy-statistics
2 https://www.debtroundup.com/top-10-overlooked-causes-debt/
3 https://www.lifelock.com/education/how-common-is-identity-theft/
4 https://www.thesimpledollar.com/identity-theft/
5 https://www.thepracticalsaver.com/causes-of-debt/saver-stories