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Bankruptcy Help For Everyday People

Certain factors may up a person’s risk of going bankrupt

| Aug 11, 2016 | Chapter 7 |

Many people who end up filing for bankruptcy in North Carolina may ask themselves how exactly they ended up in that position. It turns out that there are certain factors that increase a person’s chances of becoming insolvent. Knowing the warning signs may help some people prevent themselves from ending up in that situation.

Losing a job unexpectedly can take a serious toll on a person’s finances. While the majority of people who file for bankruptcy are employed, a drop in income certain plays a part for many people, according to the Simple Dollar. In fact, a loss of income or employment may be what leads many people to use their credit cards for everyday expenses. Credit cards are a form of unsecured debt and the average person in bankruptcy has 10 unsecured debts, at least four of which are credit cards.

It also appears that divorce plays a role in whether or not a person is likely to file for bankruptcy. At the time of filing, close to one-third of debtors in bankruptcy are divorced or separated from their partners. However, it does not appear that filing for bankruptcy leads to getting a divorce.

In addition, unforeseen expenses can lead to serious financial troubles reports the Huffington Post. Even if a person has emergency savings, the cost of a single big repair job may be enough to wipe them out. Finally, people with large medical expenses may be more likely to end up insolvent. Medical debt can plague even those people with health insurance. One study found that 62 percent of bankruptcies in the country were the result of large medical expenses.