Quite a few people think of bankruptcy as an extreme or emergency solution used by irresponsible people. They don’t imagine that they will ever have any reason to file bankruptcy themselves.
People often think that bankruptcy is only necessary for those who live a frivolous lifestyle or those who have terrible money management skills. In reality, you could be one layoff, one car accident or one severe illness away from bankruptcy yourself.
Plenty of hard-working and responsible Americans have historically needed the protection of bankruptcy, often due to circumstances beyond their control.
Life is expensive, and many people can’t save enough
Quite a few American households have no savings or more debt than savings. These households may struggle to make it from paycheck to paycheck, and even a single missed day of work could devastate their budget.
Even households that do have a substantial nest egg set aside only have $3,500 in their savings account on average. Although that can be enough money to cover emergency repairs on a vehicle or half of the deductible on your health insurance, it may not be enough to really protect you. That much money may not cover a full month’s expenses, let alone several months of expenses and extra bills.
Losing your job, getting hurt in a car crash or winding up hospitalized due to a stroke could all mean thousands of dollars of expenses and a loss of income at the same time. That $3,500 likely won’t go very far when it’s all you have to rely on for your mortgage, insurance payments, groceries and credit card bills.
Bankruptcy gives you a chance to regain control
Once your debts reach a point where you can’t easily budget them away, you need help. Making the minimum payment will mean paying huge amounts in interest and risking fees for being over the limit as well.
Bankruptcy is the most permanent solution to debt problems, regardless of how they start. Consolidation loans or debt settlement don’t end your debt obligations the way a bankruptcy discharge does.
If your family has experienced significant financial hardship due to a job loss or medical issues, a Chapter 7 bankruptcy filing could help you move past that hardship and the effect it has had on your finances.