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Why do people declare bankruptcy? 

On Behalf of | Nov 20, 2020 | Firm News

Individuals who decide to declare bankruptcy may arrive at that decision for very different reasons, and it’s wise never to assume that your solution is going to be the same as someone else’s. You need to consider the options that are best for you.

To do this, you can start by thinking about exactly why you’re in this position. Here are a few potential reasons:

You’re spending more than you earn

Even just mildly living above your means can catch up with you after a while. Since you do have earnings, though, you may want to consider something like Chapter 13 to reorganize and repay your debt, rather than Chapter 7. 

You saw a major reduction in income

Maybe you lost your job, maybe you had your hours cut, or maybe you were forced to get a new job that pays less than your last one. Again, you do have income, but that doesn’t mean it can support your lifestyle — even if that’s no fault of your own. 

You’re facing unexpected costs

Medical debts, for example, can be sudden and overwhelming. You may have had no way to avoid it. You needed treatment and, in the United States, that can get pricy. You did what you had to do for your health and your family, but now you’re wondering what steps you can take to clean up your financial position. 

Look into your options

No matter why you’re considering bankruptcy, it’s important to carefully look into all of the options you have. You may find that a solution is closer than you think.