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Though every American who files for bankruptcy brings a unique financial situation, they tend to have common causes for filing for debt relief. Some of the most common reasons for bankruptcy include:

1.     Medical bills. Even for Americans who have insurance, major illnesses or hospitalizations can lead to thousands of dollars in out-of-pocket expenses. If the illness requires long-term treatment, that further depletes a family’s savings. In no time, medical emergencies can leave a family in dire economic straits, often with no choice but to file for bankruptcy.

2.     Foreclosure. Before the housing market collapsed, many people purchased homes that they could not truly afford. When their interest rates increased, paying for their homes became almost impossible, leading to foreclosure. Behind on mortgage payments, many Americans have turned to bankruptcy as a way to stop foreclosure and modify their mortgages to make their payments manageable.

3.     Job loss. Americans who lose their jobs are having a hard time finding new positions, and long-term unemployment eats up families’ savings quickly. Without income, they cannot pay their bills and turn to bankruptcy to deal with debt and financial hardship.

4.     Divorce. In addition to the emotional stress it causes, divorce also has major financial repercussions on a family. Even if both parents work outside the home, it can be hard to make ends meet when that income has to support two households. Often, one or both spouses must declare bankruptcy because they cannot meet their financial obligations.

5.     Death. A death in the family leads to significant expenses, such as a funeral, and it often means a long-term loss of income. Even if the surviving family members receive death benefits from workers’ compensation or life insurance, it may not be enough to make ends meet in the long-term.

If you’re facing financial hardship that seems insurmountable, you’re not alone. Attorneys with Cutler & Associates can help you evaluate your debt relief options and decide if bankruptcy is right for you.


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