5 common paths to bankruptcy

5 common paths to bankruptcy

| Oct 12, 2020 | Uncategorized |

It doesn’t take the unprecedented shutting down of the world’s economy to send some family budgets spiraling. In fact, you may have many days when you fear that a single setback may upend your budget and leave you with an uncertain future. Will you lose your home? Will your creditors garnish your wages? Will you face a lawsuit for defaulting on a loan?

While it may not change your circumstances, you may find it comforting to know that many others are in your situation, teetering on the edge of financial crisis and overextending their credit just to get by. For many, it is true that one event might force them to make some very difficult financial choices.

Does this sound like your situation?

Falling behind on the bills is not uncommon. If this happens in your household, you probably have ways to juggle the money, spreading it out among your creditors until you catch up. However, in the back of your mind, you may fear any of the following that could topple the delicate balancing act you have managed with your debts:

  • Losing your job, even temporarily, can be catastrophic, especially if you are among the 30% of Americans who have no emergency fund.
  • Medical emergencies and prolonged illnesses are the most common reasons why people file for bankruptcy relief. More than 50% of all bankruptcies are related to medical debt.
  • The expenses that come with divorce or separation can be devastating. Divorce often involves splitting the assets while taking on obligations like alimony, child support and the cost of two households.
  • Failed attempts at handling debt can often backfire and make matters worse. Overusing credit cards to pay bills, using your home equity or trying a debt consolidation plan may leave you in even worse financial shape.

Of course, living in Florida places you at risk of unexpected events, such as hurricanes and other natural disasters, that can damage your home and possessions. You may need to make immediate repairs, find alternative shelter or replace critical items, such as clothing you need for work. If your insurance doesn’t cover this, you may feel like you are out of alternatives.

You do have options

If you are facing any of these common situations, you may wish to explore the option of seeking debt relief through bankruptcy. Bankruptcy offers the opportunity to stop creditors from bothering you while you work out a way to get free from your debt.

Since the process of bankruptcy can be complex and involve delicate financial matters, handling it on your own is not always a wise decision. Mistakes can be costly. Additionally, you may find peace of mind if you have the assistance of an experienced legal professional.

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