What are the leading causes of bankruptcy?

 Posted on May 27, 2022 in General Bankruptcy Topics

Collection calls may at first cause a nuisance, but they may soon become a bigger issue. When debtors want to collect, they may take legal action against you. If this is where you find yourself, you may want to consider filing bankruptcy.

Unlike years ago, the legal act of declaring bankruptcy no longer carries a negative perception. While you may not want to consider it, if your debt situation is dire enough, it may serve as a viable option to help you get a fresh start. Your debt may have from one of these common scenarios many others face.

What does the court consider unsecured debt?

A common source of overwhelming debt comes from unsecured accounts. This means that a creditor gave you a line of credit without requiring collateral. If you have a credit card, you have an unsecured line of credit. Credit card debt is on the rise and a leading contributor to needing to declare bankruptcy as late fees mount and interest rates rise.

What do medical bills do to your credit?

If you faced a medical event that led to lost time from work and late payments, you are not alone. It accounts for the highest rate of debt and leads to bankruptcy more than any other debt. Even with insurance, out-of-pocket costs can prove too much for an average person to bear. Since most of the time, medical bills come from an unforeseen emergency, it leaves little to no time for preparation.

Bankruptcy can allow you to shed some or all of the debt that troubles you. If you are careful with your future finances, bankruptcy can allow you to move forward and walk a new financial path.