Chicago Bankruptcy Question: Why do people file for bankruptcy?

Todays Chicago Bankruptcy Question of the Day:  Why do people file for bankruptcy?  Congress is apparently under the impression that most people file for bankruptcy because they are irresponsible, uneducated or simply trying to beat the system.  This must be why they continue to make bankruptcy a more difficult, time consuming and expensive process.  Or maybe it's because the it's the banks, credit card companies and finance companies that write those big campaign contribution checks, not the people struggling with debt.  This reasoning is patently false and has been proved as false repeatedly.  There are very simple and clear reasons why most people file for bankruptcy protection:

Job loss:  With unemployment hovering between 8 - 11% and under-employment estimated at 18-20%, many people are facing this situation.  While working, most people pay their bills timely, incur credit that they can afford to repay and support this economy by being good and responsible consumers.  Once a job is lost, however, many people have to rely on unemployment or take a lower paying position just to pay for the basic necessities.  Their debts take a back seat to buying groceries and paying the utilities, as they should.

Medical issues:  Nobody plans to have a heart attach, get cancer, slip a disc, etc.  When it happens, however, the effect can be overwhelming.  Even families with decent health insurance end up racking up huge bills due to deductibles, co-pays and limitations on coverage.  This is compounded by the fact that many serious injuries/conditions require individuals to go onto disability at a much lower income level than they are used to.  Now they are in the position where they must choose whether to pay their debt or treat their conditions. 

Family breakdown:  We all get married thinking that it will last forever.  We rely on this as we go forward in life, buying a home, financing a minivan and incurring credit card debts to fill the house with furniture, clothes and toys for the kids.  Unfortunately, the divorce rate in the U.S. remains consistently over 50%.  When the family unit breaks down, both parties are required to pay their own household expenses, not to mention divorce lawyers, leaving little money to pay their marital debts.  Add to this situation those where a family member becomes disabled or passes away and it is easy to see why the breakdown of the family leads to a variety of financial troubles.

These three factors can be directly linked to the vast majority of bankruptcy filings.  None intentional, none planned and none truly desired.  If these happen, however, the advice of a qualified and experienced bankruptcy lawyer is vital.  If you are in this situation, you can contact the bankruptcy attorneys at Ledford & Wu to schedule a free consultation and review your options regarding your financial situation.

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