Archive for the ‘The Truth about Bankruptcy’ Category

Wednesday, January 23rd, 2013

Myth Busting Bankruptcy

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The word “bankruptcy” is scary, often avoided and rarely thought of in a positive manner. People say, and sometimes whisper, all sorts of things about bankruptcy but how do you know what is true and what isn't?

If you’re thinking about bankruptcy as an option for you, take the time to wrap your head around the facts instead of letting the myths wrap themselves around you.

10 Bankruptcy Myths to Bust

  1. Everyone will know I have filed for bankruptcy
  2. All debts are wiped out in Chapter 7 bankruptcy
  3. I'll lose everything I have
  4. I'll never get credit again
  5. If  I'm married, we both have to file for bankruptcy
  6. It's really hard to file for bankruptcy
  7. Only deadbeats file for bankruptcy
  8. I don't want to include certain creditors in my filing
  9. I can't get rid of back taxes through bankruptcy
  10. I can only file for bankruptcy once

And! Bonus myth...I can max out all my credit cards and then file for bankruptcy.

Everyone will know I have filed for bankruptcy

Yes, filing for bankruptcy is a matter of public record so people can find out if they have their hearts set on it, but the media won’t be shouting it from the rooftops unless they've already been shouting about you. If you've had the media attention before, you likely will get it again, but the average person can quietly file for bankruptcy.

All debts are wiped out in Chapter 7 bankruptcy

Unfortunately, every form of debt cannot be discharged, that’s just how it is. The list of non-dischargeable debts in bankruptcy includes, but is not limited to:

  • Child support
  • Debts incurred based on fraud
  • Government issued (or guaranteed) student loans
  • Most taxes

I’ll lose everything I have

You won’t lose everything, so don’t let this common myth keep you from filing for bankruptcy if it is in your best interest to do so. Depending on the type of bankruptcy you are filing for, as well as the state you live in, the laws differ.
There are exemptions put in place to help protect you and parts of your life. Some things you may be entitled to keeping, but are not guaranteed are:

  • Car (up to a certain value)
  • Clothing
  • House
  • Household goods
  • Money in qualified retirement plans

I’ll never get credit again

False! You will likely never be free from credit card offers. It is important to pay close attention to the interest rates because subprime lenders will jack up those rates.

Also, keep in mind that you just filed for bankruptcy and it is probably best to go easy on the credit so you don’t get yourself into a hole again.

But, if you need credit, you can get it.

If you’re married, both spouses have to file for bankruptcy

Both spouses do not need to file for bankruptcy together but your financial situation will determine if that is in your best interest or not.

If you have many debts that are shared between the two of you, it is often better to file together; otherwise the party who did not file is on the hook for the full amount of the debt.

If only one spouse holds the vast majority of the debt, it is more than fine for just that party to file.

It’s really hard to file for bankruptcy

Contact a qualified attorney and they will guide you through the process. Don’t let the fear of the process steer you away from filing if that is what is best for you.

Only deadbeats file for bankruptcy

This is quite far from the truth. Generally life changing events cause people to file for bankruptcy and life changing events happen to all of us. Sometimes people file bankruptcy after:

  • Divorce
  • Job Loss
  • Serious illness

Any of these life changing events will alter your finances in one way or another. They can leave you struggling to pay your bills on time and as time goes on, you can become buried in the debt.

I don’t want to include certain creditors in my filing

When you file for bankruptcy, you must include all of your creditors in your filing. Once your debts are discharged in bankruptcy, you are no longer obligated to pay them.

But! If you are hell bent on paying any of your creditors, you can always pay them back on your own, when you’re able.

Some people want the peace of mind of repaying their debts while others are happy to be free of the debt. Neither way is right or wrong and you should do whatever you are most comfortable with.

You can’t get rid of back taxes through bankruptcy

While in many cases this is true, there is such a thing as tax bankruptcy according to the Web Tax Mama, tax educator, Eva Rosenberg.

You can only file bankruptcy once

This is not true but time limitations do exist. For Chapter 7 bankruptcy, you can only file once every 8 years. For Chapter 13 bankruptcy cases, you have to wait 2 years and if you’re going from a Chapter 7 to a Chapter 13 case, you have to wait 4 years.

I can max out all my credit cards and then file for bankruptcy

This would be frowned upon and called fraud. Judges don’t take too kindly to fraud so try to limit your pre-filing purchases to necessities.

The trustee in your case will review everything right before filing and know what to look for.

It is important to understand the ins and outs of bankruptcy and lay any misconceptions you may have to rest. The myths above often prevent some people from filing for bankruptcy when it is really the most responsible thing to do in their situation.

The best thing do is educate yourself and contact a bankruptcy attorney to answer any questions you may have and guide you through the process.

Source:Kenneth Love, Ken Love Law, a Consumer Protection Firm

Bankruptcy is a hard time for anyone who has to go through it. For those with medical bills, encroaching financial troubles are an everyday concern.

In fact, is it reported that one of the main reasons why people file for Chapter 7 bankruptcy is because of medical bills. In this infographic, you’ll see exactly how many Americans are afflicted by debt from their medical expenses.


The Truth About Health-Related Bankruptcy

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Reasons for Declaring Medical Bankruptcy

  • Illness and medical bills accounted for 62.1% of all bankruptcies in 2007.
  • 40.3% of debtors suffered income loss as a result of an illness.

Reasons for Declaring Bankruptcy

Medical Bills Medical Problems of Self or Spouse
57.1% 32.1%
  • 40% of medical bill debtors had a lapse in insurance coverage sometime in the 2 years prior to filing, whereas less than 25% of debtors were actually uninsured when they filed for bankruptcy.
  • While 76% of households owe on medical bills, 47% have credit card debt as a result of medical expenses.
  • Of those who do not owe medical bills on a credit card, the average debt is $6,476.
  • Around 51% of families have attempted to reduce medical bills by:
    • Refusing or delaying a prescription refill - 33%
    • Skipping out on a medical test, follow up, or treatment - 36%
    • Not going to a doctor for a medical issue - 39%

Declaring Chapter 7

If you declare Chapter 7, you probably have problems with an unsecured debt, such as medical bills or credit cards.

You’re not alone.

Percent of Unemployed Debtors Falling Behind on Payments by Age

18 to 29 30 to 49 50 to 64 65 or older
22% 35% 19% 12%

Top Five States for Bankruptcies Per Capita in 2012

Position 1 2 3 4 5
State Tennessee Nevada Georgia Utah Alabama
% of Bankruptcies that were Chapter 7 52% 81% 53% 65% 44%
Filings Per 1,000 people 7.19 7.00 6.65 5.87 5.87
  • In 2011, over 1 million people filed for Chapter 7 bankruptcy.
  • Debtors filing Chapter 7 owed well over $348 million to unsecured creditors in 2011.
    • The average person owed $11,079 in unsecured funds.

Conclusion

Medical bills can add up quickly, especially if someone has continuous health problems that require constant treatment. If you are falling behind on your medical financial obligations, remember that you are not alone and there are many people struggling with this ongoing problem.

While most consumers might be familiar with Chapter 7 bankruptcy, it's not the end-all, be-all of bankruptcy in the U.S.

While Chapter 7 bankruptcy forgives a majority of unsecured debt, the lesser-known chapter 13 bankruptcy allows a consumer to keep their assets and repay their debts over a three- to five-year period.


For a full breakdown of the ways Americans are calling it quits on debt, see the infographic below:

a snapshot of bankruptcy in america

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You hear about major companies filing for bankruptcy, but what is the bankruptcy landscape really like?

How have people and businesses been holding up?

Here's a look at the general status of bankruptcy in this country.

Which type is filed the most?

Chapter 7 Debt Discharge: Allows trustee to sell debtors non-exempt assets so the debts can be repaid as much as possible. All other eligible debts that can't be paid for through liquidation are wiped away. For companies, business operations would have to cases. Corporations, partnerships, and individual people are eligible.

Chapter 13 Repayment Plan: Debtor can keep his or her assets. A 3 to 5 year repayment plan is worked out. Individual people are eligible.

Other: A well-known chapter in this category is Chapter 11. Similar to Chapter 13, but mainly for businesses. Reorganization plan is established to help pay creditors. Businesses and some individuals are eligible.

How many are filed?

In 2011, there were about 1.4 million bankruptcy filings.

Filings fell almost 12% from 2010 to 2011.

Declines were seen in both Chapter 7 and Chapter 13 bankruptcies.

When thinking about bankruptcy, remember that there are different ways to file depending upon a person or company's situation.

For more information on the state of personal bankruptcies in the United States, check out our report on the demographics behind bankruptcy filers.

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Here’s an inspirational story for anyone who has filed for bankruptcy and felt overwhelmed by the burden of their debt.

Resurrected NFL star Michael Vick has bounced back from a prison sentence and a Chapter 11 bankruptcy case that included $18.97 million in debts owed to creditors. At present, according to TMZ.com, he owes less than $400,000 to creditors. (To put that in perspective, Vick earned about $11 million in his most recent season playing for the Philadelphia Eagles.)

While Vick’s debts and earnings are well beyond what most of us manage to accrue, his attitude toward bankruptcy and success in powering through provide useful insight about what it takes to get past a personal bankruptcy filing.

Beat Bankruptcy the Michael Vick Way

Follow the NFL star’s path out of bankruptcy to make your own comeback after debt has gotten you down:

  • Keep bankruptcy in perspective. Michael Vick filed his Chapter 11 bankruptcy case in 2008, when a conviction on dog fighting charges landed him in jail. At the time, he was viewed as a disgraced star whose career was cut tragically short. But he came out of jail ready to rejoin the NFL, and has, since 2009, proven himself an indispensable part of the Eagles squad. The lesson here is that, while bankruptcy may feel like a huge dead end, it really is a new beginning for most people. While going through bankruptcy has negative effects on your credit in the short term, it also provides you an escape to a debt-free life—if you’re willing to do the hard work necessary to live that life.
  • Make slow and steady progress. Whether you file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code, your progress to your new life will not be fast. You’ll have to repay your debts (in Chapter 13) and/or make some serious changes to your lifestyle. But it’s essential to believe in the long-term power of saving a little bit of money at a time, of paying down debts as they come, and of sticking to your budget to prevent yourself from getting in to unmanageable debt.
  • Change the way you do things. Unless you land a killer new job after bankruptcy (as Vick was lucky enough to do), chances are you’ll have to adjust your lifestyle to your new budget, particularly if you’re making payments on a Chapter 13 repayment plan. But making small changes to your everyday habits can add up to big savings in the long term, and will ultimately keep you out of debt (and bankruptcy court) in the future.
  • Build a new life. Don’t think of bankruptcy as a failure. Think of it as a wakeup call. You can thrive in your life after bankruptcy, and if you seize the opportunity of a financial fresh start that your bankruptcy discharge provides you, you likely won’t have any trouble doing so.

In 2009, when Chrysler accepted a federal bailout and filed for bankruptcy protection, many critics shook their heads, suggesting that the carmaker should be allowed to fail if it was not producing cars that appealed to the market.

But just two years after emerging from bankruptcy protection, Chrysler has earned a profit, and appears to be on target to continue doing so in coming years. Here’s a look at the specifics of Chrysler’s success, why bankruptcy worked for the car manufacturer, and what individual bankruptcy filers can learn.

Chrysler’s Bankruptcy by the Numbers

  • In 2009, Chrysler accepted $12.5 billion in bailout funds. Though the carmaker repaid its loans, analysts estimate that the public lost about $1.3 billion on the deal, all told.
  • In 2011, Chrysler notched a profit of $183 million, up significantly from a loss of $652 million in 2010. Forecasts for 2012 predict that the company will earn $1.5 billion this year.
  • Sales in 2011 jumped at home (24 percent) and abroad (22 percent), totaling 1.86 million vehicles.
  • Sources note that January 2012, sales were up 44 percent compared to the same month a year ago.
  • In the fourth quarter of 2011, Chrysler recorded a net income of $225 million, up from 2010’s net loss of $199 million.

Why Bankruptcy Worked (and What We Can Learn)

Part of Chrysler’s post-bankruptcy success might be attributed to an improvement in the overall economic situation. The country is not in as dire straits now as it was when the company filed its bankruptcy petition. However, the bankruptcy court success of both Chrysler and GM (which filed for bankruptcy around the same time and is now similarly profitable) resulted from a number of important factors, including these.

  • Knowing when to file. As with individual bankruptcy cases, timing matters in corporate bankruptcy. For individuals, waiting too long to file a bankruptcy petition can be counterproductive, especially if a filer burns through savings or retirement accounts in an effort to repay debtors. Under the protection of the bankruptcy court, retirement accounts and some savings are protected from creditors.
  • Cutting unproductive arms. Chrysler closed down a number of dealerships and cut off less-productive brands under its aegis in an effort to streamline its operations. The cuts paid off, allowing the company to produce vehicles that people are more interested in buying. Individuals in bankruptcy may be able to completely eliminate certain debts, and can generally rearrange others to make repayment of those debts easier.
  • Changing strategy. Moving out of bankruptcy, Chrysler plans to introduce new models of cars (and bring back some old favorites) in order to meet the changed demands of the public. Individuals emerging from bankruptcy must similarly assess their daily behaviors and expenses, and make significant changes to prevent a recurrence of debt.

A recent article from The New Yorker highlights a troubling disparity in the way we view bankruptcy and loan restructuring in general in this country. As was evidenced in the recent bankruptcy filing of American Airlines, bankruptcy for corporate entities is generally considered part of an overall savvy approach to managing debts and investments.

While American could have continued paying its debts (it filed bankruptcy with more than $4 billion in the bank), it opted to take the bankruptcy route, which will allow it to restructure its debts into ones that make more financial sense. After the company filed its Chapter 11 bankruptcy petition, most analysts praised its decision, citing the success other airlines have had with reorganization bankruptcies in recent years.

For consumers interested in filing personal bankruptcy, though, the attitude of the general public is vastly different.

Bankruptcy as a Moral Issue

The current turmoil in the housing market highlights exactly how differently the general public views personal bankruptcy:

  • The housing bubble falsely inflated housing prices. Arguably, the analysts and economists who were equipped to recognize this bubble for what it was and attempt to prevent its burst did not. Also arguably, consumers might have recognized the bubble but were less likely to do so than those trained in economic fields.
  • Lenders and homebuyers took on risky debts, betting on rising home prices to pay them off. We now know that those debts were not so good.
  • Many banks lost millions or billions of dollars on bad home loans. Some of those banks benefitted from taxpayer-funded bailouts. Others have staunchly refused to refinance (on a significant scale) mortgage loans that have become untenable for their borrowers.
  • Many homeowners are underwater on their homes. Sources note that many Americans owe up to 50 percent more than their home’s value on their loan. The “smart move” financially for these people would be to walk away from their mortgage, to abandon their homes and stop paying their mortgages. Most don’t, though.

One of the major reasons more homeowners aren’t walking away from their unaffordable homes, even when such a move would be financially logical, is that nonpayment of loans has been morally stigmatized in the media.

Figures including the head of the Mortgage Banker’s Association have reportedly noted that defaults on home loans “send the wrong messages” to community and family members. Others have hinted that we would do well to bring back debtors’ prisons. The total effect, in other words, is that personal bankruptcy and similar moves (even when they’re financially savvy) have been labeled as morally deleterious.

The New Yorker article summarizes the problem in its closing paragraphs, noting that the prevailing attitude in the U.S. runs that individuals ought to “do the right thing” by honoring their debts, but that large businesses, banks, and corporations—who usually have much more capital at their disposal—can do whatever earns them the greatest profits.

The current financial situation of American Airlines serves as a lesson on how filing for bankruptcy can lead to long-term financial strength – and, perhaps more importantly for the airline, how avoiding bankruptcy can sometimes cause long-term financial struggles.

Of course, every individual situation is unique and the American Airlines model can’t be applied across the board. But for people teetering at the edge of their finances wondering whether personal bankruptcy could have any benefits down the road, the story of American Airlines is worth considering.

Avoiding Bankruptcy

In the months and years immediately after the terrorist attacks of September 11, 2001, Americans flew less and many airlines struggled to remain profitable. In the ensuing years, many of them (including Delta, Northwest, US Airways and others) filed for Chapter 11 bankruptcy protection, which allowed them to reorganize their finances and debts.

American Airlines did not choose bankruptcy; instead, the airline opted to negotiate benefits and salaries with its employees and managed to continue operating. At the time – and, according to some reports, even today – the airline’s CEO was proud of his company’s ability to stay out of bankruptcy court. But some analysts are questioning whether the decision made sense financially.

Today, American Airlines operates at a loss. In fact, sources note that the airline:

  • Has more than $12.1 billion in outstanding debts;
  • Is saddled with a pension liability (for which it has no funding) of about $7.9 billion;
  • Earned $11.6 billion last year but had a net loss of $716 million;
  • Is expected to report a $132 million loss for 2011’s third quarter; and
  • Recently took on a high-interest (8.75 percent) loan for about $726 million.

These numbers are particularly gloomy when compared with those of the nation’s other leading airlines, most of which are currently operating at a profit, according to sources. In fact, comparisons between American Airlines and its competitors show stark differences.

In addition to having the least fuel-efficient fleet of planes in the country (which sources estimate cost it as much as $400 million in extra fuel expenses per year), American pays its staff more per flight hour than other airlines. One analyst estimates that if American could cut its per-flight-hour operating costs to those of US Airways, the airline would save $2.2 billion per year.

So how have other airlines managed to do so well in a struggling industry? Most of them filed for bankruptcy – and reemerged as stronger, more profitable companies.

Emerging Stronger from Personal Bankruptcy

For corporations, Chapter 11 bankruptcy provides the rare opportunity to renegotiate contracts with venders, employees and unions. Most companies also sell of unused assets and devise a court-approved way to be able to make a profit while treating all of their creditors fairly.

Like airlines, individuals can use the power of the bankruptcy court to introduce positive financial change into their lives. Bankruptcy may offer several unique protections and opportunities not offered by common debt elimination alternatives, including:

  • Full discharge of certain debts, meaning that the court legally excuses filers from paying them;
  • A temporary halt to collection actions, which can give filers breathing room to take control of their finances; and
  • Financial management and credit counseling resources so filers can learn to establish and maintain financial habits that will improve their overall finances.

The Borders bankruptcy case currently making headlines provides a helpful illustration of the difference between the two main forms of bankruptcy, reorganization and liquidation. Here’s a look at what we can learn about personal bankruptcy from the Borders situation.

Reorganization: Chapter 11 and Chapter 13 Bankruptcy

Reorganization bankruptcy is exactly what its name suggests: it allows filers to reorganize their debts and assets to catch up on overdue payments. When a business files for reorganization (usually under Chapter 11 of the U.S. Bankruptcy Code):

  • It continues operating. Some store branches may close and the company may “streamline” its operations to make itself leaner and more likely to turn profits when the bankruptcy concludes.
  • It repays creditors. Chapter 11 cases, like Chapter 13 cases, include a plan that allows the filing company to compensate its creditors at least in part for its debts.
  • It tries to emerge stronger. The goal of a business reorganization is to trim the fat and let the company get back on its feet with a more workable model.

The Borders situation, though, seems unable to benefit from a Chapter 11 bankruptcy. Sources suggest that this is because of a number of factors, including the weak economy, the changing face of books and the fierce competition it faces from online booksellers.

When an individual enters a reorganization plan (usually under Chapter 13 of the U.S. Bankruptcy Code), she also makes payments to her creditors. At the end of the repayment period (usually three to five years), her goal is to emerge debt-free and with financial habits that will keep her that way.

Liquidation: Chapter 7 Bankruptcy

When a company liquidates (under Chapter 7 of the U.S. Bankruptcy Code), it sells off its assets and ceases operations. In other words, if Borders does indeed file for Chapter 7 bankruptcy, it will no longer be around. Business liquidations usually:

  • Involve a sale: This might come in the form of an “everything must go” sale of merchandise in stores, an auction to other businesses, or some combination of the two.
  • Lead to partial repayment: The proceeds from the sales are generally used to repay in full or part any creditors to which the company owes money at the time of filing.
  • Mean job losses: In Borders’ case, the company would have to close its 399 remaining stores and likely lay off the more than 10,000 people it currently employs.

Individuals who file for Chapter 7 usually don’t have enough income to make repayments to creditors. The liquidation part of an individual bankruptcy filing involves the bankruptcy trustee selling a filer’s non-exempt assets to raise money to repay creditors in part.

Wednesday, July 20th, 2011

Foreclosure after Bankruptcy

Chapter 13 bankruptcy is sometimes considered “famous” for helping people avoid or delay foreclosure. But it’s important to understand that filing for Chapter 13 (or even Chapter 7 bankruptcy) does not guarantee that you will avoid foreclosure.

Here’s a look at foreclosure laws and how foreclosure after bankruptcy works.

Preventing Foreclosure During Bankruptcy

Filing for bankruptcy temporarily stops foreclosure in most cases. Here’s why:

  • A legal protection called the automatic stay takes effect as soon as the bankruptcy case is filed. The automatic stay halts all collection actions, including creditor calls, repossession and foreclosure.
  • This protection typically stays in effect for the duration of the bankruptcy case. That could be as little as four to six months for a Chapter 7 case and as long as three to five years for a Chapter 13 case.

But the protection of the automatic stay only lasts as long as a filer sticks to the terms outlined by the bankruptcy agreement. In Chapter 13, that means making regular monthly payments according to the repayment plan.

If the filer can’t catch up on mortgage payments even with the help of bankruptcy, foreclosure might still be an option after the bankruptcy case ends.

Liens, Second Mortgages & Foreclosure after Bankruptcy

Things can get tricky, too, when filers have second mortgages or home equity lines of credit (HELOCs) when they file for bankruptcy. And thanks to the housing market that collapsed in 2007, many Americans currently do have multiple mortgages or loans attached to their homes.

Here’s how they’re treated by the bankruptcy court:

  • A HELOC in Chapter 13 bankruptcy: In Chapter 13, filers are required to make payments to their primary mortgage lender and to the bankruptcy trustee. The trustee distributes these payments among priority debtors. After the case concludes, the HELOC may be eliminated (discharged). The lender will have gotten a percentage of trustee payments during the case.
  • A HELOC in Chapter 7 bankruptcy: Chapter 7 may cancel the debt on a home equity credit line, but it cannot cancel the lien that creditor has on the house. In fact, a HELOC lender may still be able to foreclose on a filer’s house after bankruptcy is over (though if there’s no equity in the house, this would be unlikely). One way to avoid post-Chapter 7 foreclosure is to reaffirm payments to a HELOC lender in during bankruptcy.
  • Second mortgages in Chapter 13: Second mortgages that are no longer secured by a home’s value can be discharged in Chapter 13 bankruptcy. Underwater homes may have second or third mortgages that are not secured any longer by the house’s value (that is, the amount of the loans totals more than what the house is currently worth). However, discharging a second mortgage will not affect what a bankruptcy filer owes on a first mortgage.

Could You Face Foreclosure after Bankruptcy?

If you’re considering filing for bankruptcy as a way to escape foreclosure, it’s essential to speak with a bankruptcy lawyer to make sure you understand how your mortgage will likely be affected by a bankruptcy filing – and whether you might find yourself facing foreclosure after you get your discharge.

A study recently published by the web site Find Law indicates that a considerable percentage of the U.S. population (one in eight survey respondents, or nearly 13 percent) has either considered filing for bankruptcy or actually done so.

That figure may seem high, but in a nation of consumer debt, depreciating home values and a limited job market, perhaps it’s no wonder that so many of us are in need of serious the serious financial protection and debt relief that bankruptcy can offer.

Who Is Considering Bankruptcy?

The study breaks down potential bankruptcy filers in part by age:

  • Americans between 35 and 54 are reportedly the group most likely to consider bankruptcy as an option.
  • Americans 18 – 34 and 55 and older are, according to sources, half as likely as the middle age group to consider or actually file for bankruptcy.
  • Senior citizens (those 65 and older) are apparently the least likely group to consider bankruptcy as a debt relief option, at only seven percent.

How Have Bankruptcy Filing Numbers Changed in Recent Years?

Sources indicate that in 2010, 1.5 million Americans actually filed for bankruptcy protection. This number marks the highest annual total since 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) took effect and tightened the standards for those interested in bankruptcy protection.

Why Do So Many People Need Bankruptcy Protection?

While no two bankruptcy cases are alike, bankruptcy filers often note common triggers that led them to seek the protection of the bankruptcy court. These include:

  • Unexpected medical expenses: Illness and injury can both cause serious medical bills to build up, particularly for those people who are uninsured or underinsured. And even an otherwise happy event, like the birth of a child, can prove very expensive.
  • Change in family makeup: Divorce and death are difficult to deal with on their own, but are often compounded by the financial troubles they cause. Many families are forced to face unpleasant financial realities after divorce or death carries off a primary breadwinner.
  • Job loss or reduction: Even good employees are at risk of losing their jobs in the current economic climate, and even though layoffs have slowed in recent months, the unemployment rate remains high. It’s no secret that this type of financial burden can lead a household to seek bankruptcy protection.
  • Fear of foreclosure: Even those with good health and steady jobs may find themselves unable to keep up with their mortgage, and some families opt to file for bankruptcy in hopes of fending off mortgage foreclosure.

Considering the many factors that can contribute to a household’s decision to file for bankruptcy protection, it may be a wonder that only one in eight Americans has thought about personal bankruptcy!