When many people think of those who end up filing for bankruptcy or seeking other types of relief from debt, they imagine that it is only those who live in poverty or are unemployed that have such troubles. However, those with moderate incomes are increasingly feeling the financial burden caused by debt, for a few different reasons.
One major one is the fact that many families do not have any type of emergency savings. When a cost occurs unexpectedly, they are forced to take on debt in order to get by. According to the Atlantic, even a cost as small as $400 would be uncoverable for 44 percent of people who earn between $40,000 and $100,000 per year. So, while people may have many possessions, they do not have much or any saved as a cushion in the case of an emergency.
In addition, it is a fact of life for most people that they will need to take out a loan to purchase a home, buy a new car or send a child to college. Not only do those expenses quickly add up, but the costs for those things tend to be higher as a family’s income grows.
Medical costs are also a key factor, points out PBS NewsHour. In Mississippi, the state with the highest amount of medical debt, 40 percent of adults have an outstanding balance from a health care provider. And when people fail to pay their medical bills, doctors and hospitals feel the crunch as well. Outwardly, it may seem wrong that people can afford to pay for homes or new cars but not their hospital bills but the issue is not that simple. For some, this is why bankruptcy is an attractive option that allows them to get back on sound financial footing