Bill Harrington
May 6, 2024

Most Common Reasons People File for Bankruptcy

Debt may accumulate quickly from sudden life changes or disasters, here are the most common reasons why people file for bankruptcy.


The Benefits of Bankruptcy

When multiple financial hardships culminate and leave an individual unable to pay off their debts, they may choose to seek relief by filing for bankruptcy. Bankruptcy allows those in deep debt to effectively eliminate the majority, if not all, of their unsecured debts through a process known as “discharge.”

Causes of Bankruptcy

By filing for Chapter 7 Bankruptcy, an individual can reduce specific debts, such as credit card balances, unsecured personal loans, and overdue utility bills. There are many factors that can leave someone without the ability to repay outstanding debts or obligations; here are the most common reasons people file for bankruptcy.

Medical Expenses

Even with health insurance, medical bills can be exorbitant, particularly for severe illnesses, surgeries, or long-term treatments. Co-pays, deductibles, and uncovered expenses can quickly add up, leaving individuals with overwhelming debt.

Job Loss / Reduced Income

Losing a job or experiencing a significant reduction in income can lead to a sudden inability to cover basic living expenses and debt payments. Without a steady income, individuals may struggle to keep up with mortgage or rent payments, utility bills, and other financial obligations.

Excessive Credit Card Debt

Many people rely on credit cards to cover everyday expenses or unexpected emergencies. However, high interest rates and minimum payments can make it challenging to pay off balances, especially if individuals continue to use credit cards to supplement their income or maintain their lifestyles.

Divorce or Separation

Divorce or separation often involves significant legal expenses, such as attorney fees and court costs, as well as the division of assets and potential alimony or child support payments. Establishing separate households can also double living expenses, putting additional strain on finances.

Unexpected Expenses or Emergencies

Life is full of unforeseen events, such as car accidents, home repairs, or natural disasters, that can result in substantial financial burdens. Without adequate savings or insurance coverage, individuals may struggle to recover from these emergencies and may resort to bankruptcy as a last resort to manage their debt.

People often file for bankruptcy due to a combination of these factors. While some bankruptcy cases are due to overspending, many are due to unforeseen circumstances or life events. If you are considering filing for bankruptcy, you are not alone. At WPH Law, our bankruptcy lawyers are here to help.

Contact the Pennsylvania Bankruptcy Lawyers at WPH Law Today

Filing for bankruptcy is a very difficult decision, often with one's entire livelihood at stake. If you are planning to file for bankruptcy, you need the help of a legal professional. At WPH Law, our bankruptcy attorneys fight for our clients to restore their lives when they fall on tough times. We stand ready to advocate for you, help erase your debt, and protect your assets. Speak with us for free today.

Contact us today by submitting a form below or calling our office at 484-459-5075 for a free consultation.

Attorney William P. Harrington, Jr., ESQ.

Bill Harrington

Bill is an experienced attorney in estate planning and administration, credit card debt litigation, bankruptcy, and personal injury. He lives in Kinzers, PA, with his wife and three children.
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