Poor spending is not always the reason for bankruptcy

Poor spending is not always the reason for bankruptcy

| May 18, 2020 | Firm News |

Michigan residents who struggle with overwhelming debt may hesitate to consider the option of bankruptcy to find relief from their burdens. This may be because of the misplaced stigma attached to the process and the false belief that someone who files for bankruptcy must be a careless spender. While this may be true in some cases, in many other situations, the factors that lead to overwhelming debt are out of the consumer’s control.

About 62% of those who file for bankruptcy do so because of medical debt. If someone in the family suffers a catastrophic injury or serious disease, it may take no time at all before the family uses up savings, retirement plans and every other resource, and still they may owe hundreds of thousands of dollars. Almost 80% of those who file for bankruptcy for medical debt had health insurance.

Personal setbacks can affect one’s ability to pay debts that are owed. Many find themselves in this situation after losing their jobs. Others go through a divorce that leaves them with support payments and legal fees that place a tremendous strain on their budgets. Some may suffer an unexpected loss, such as a house fire, natural disaster or crime, and their insurance may not cover the cost of replacing the things they need.

Even those who plan carefully, establish emergency funds and are wise with their money may find themselves facing a financial crisis from which they cannot emerge. However, bankruptcy offers a chance to get free from most debts and to start over with hope for a brighter future. Choosing this alternative may not be easy, but the assistance of an experienced Michigan attorney may prove beneficial.