The current statistics on bankruptcy in the US are sobering. We’ve seen a huge rise in the number of people falling into bankruptcy. What used to be an institution for the failed entrepreneurial class has now become a tool for the masses. Even Congress has had to step in and make bankruptcy more difficult to prevent it from being abused.
Here we’re going to look at the main reasons why people are going bankrupt. Does any of this speak to your personal situation? Let’s find out.
You’ve Been Run Into The Ground By Medical Expenses
According to Harvard University, medical expenses are the biggest cause of bankruptcy. The data show that medical costs are the reason for 68 percent of all bankruptcies in the US. What was more interesting was the fact that many of those who went bankrupt had health insurance. Of course, now the deductibles in the US are so high, most people can’t afford healthcare. The insurance market has failed, and we’re likely to see even more problems in the future.
When people come down with rare or severe conditions, they start spending their wealth. First, they dip into their savings. Then they sell off all the equity in their homes. Finally, they file for bankruptcy as a protection against mounting debt to pay for medical costs.
Avoiding medical costs in the US right now is almost impossible, thanks to recent policy changes. So the best way to protect yourself from costs is to take personal control of your health. Eat well, exercise regularly and stay happy.
You’re Separated And Just Lost All Your Stuff
The end of a marriage can cause tremendous financial distress for people involved. There’s the direct cost of the divorce itself, including the loss of wealth. Then there are the ongoing alimony and child care costs, which all add additional pressure. Right now, the courts can order wages to be garnished, making it even more difficult for a person to pay their other bills. This can eventually lead to bankruptcy.
So what are the solutions? One is to get legal help. Divorce lawyers like Skillern Firm can help you keep your stuff. The other is to try to avoid the divorce and work through the problems in the relationship. There’s a good chance that your partner will also be a lot worse off following the separation.
You Don’t Know How To Use Credit
Credit card debt in the US is at record levels. Why? Because right now, people can’t control their spending. It’s a big problem and one that could land the economy in a heap of trouble. The problem is that spending to excess has become normalized. With interest rates so low, it’s easier than ever before to shift paying for stuff into the future and just buying up stuff on credit.
The evidence suggests that most debt-consolidation plans don’t actually work. The problem isn’t that there are too many payments or that they are too complicated. It’s that people can’t defer gratification. The need to have stuff now is too overwhelming. Ultimately, this is what leads to bankruptcy.