Top 5 Reasons Individuals File for Bankruptcy Protection

After practicing bankruptcy in the Detroit Metro Area for the last several years I have come to the conclusion that most individuals who file bankruptcy do it for the right reasons. Below are the five most frequent reasons that I have heard from my clients as reasons they were forced to file.

1) Health-- Unfortunately many Americans are forced to file for bankruptcy due to health related reasons. This includes both uninsured individuals who cannot afford to repay their massive medical debt and individuals who are no longer able to work due to illness.

2) Loss of Job-- Many individuals are forced into bankruptcy because they have lost a job and have been unable to find a new job for 6 months or longer. Unfortunately this tends to be older workers who have lost a job that had good wages and benefits. These individuals often cannot find similar employment in part due to their age.

3) Divorce-- Divorce and bankruptcy go hand in hand. Nothing is harder on a marriage than financial struggles. Similarly nothing is harder on your budget than losing half your household income.

4) Lawsuits/Garnishments-- Many individuals are forced to file because they are sued by an individual for an amount they cannot afford to pay. Whether it be a car accident, a slip and fall, or simply a collection matter, lawsuits can really hurt individuals who are already struggling to get by.

5) Foreclosure-- Many individuals are able to face their struggles and come out on top without filing bankruptcy. However, just as many individuals believe they are about to come out from the dark ages of personal finance and get their life back on track the mortgage company steps in and begins foreclosure proceedings. For these individuals, a total bankruptcy may not be necessary, but a Chapter 13 Reorganization gets filed in order to save their home.