Filing Bankruptcy
Filing bankruptcy is a personal, and often a very emotional decision. Thousands of people each year file different types of bankruptcy petitions to either eliminate or consolidate their debt. Although the laws for filing bankruptcy have become more stringent in recent years, many people who find themselves in a situation where they cannot possible pay their bills. Most bankruptcy cases involve people who have met financial hardship through a series of difficult circumstances and to whom bankruptcy is the last resort. Many people feel that filing bankruptcy is the ultimate sign of defeat and feel ashamed and embarrassed. In many cases, people filing bankruptcy are not solely to blame for their predicament.
Women filing bankruptcy in federal court often end up in bankruptcy court due to a divorce. Although more women work outside of the home than ever before, some women who undergo a divorce find themselves with more bills to pay than there is money. In many cases, when a couple splits up, the marital debt is divided between both parties. In many instances, one or both of the parties do not have the money to pay off the debt by themselves. The debt on credit cards usually incurs a high interest rate as well as late fees. Missing a couple of payments on a credit card can really take a financial toll on an individual. The combination of high credit card bills with substantially decreased income is a recipe for bankruptcy. About thirty percent of people who file bankruptcy do so because of a divorce.
Another reason for filing bankruptcy is a catastrophic event, such as hospitalization, that leaves one with very high debts and no visible way to pay them off. About half of all bankruptcy cases are due to the debtor or someone in their family being hospitalized without insurance. These people often will never be able to pay off $100,000 in medical debt, even at little or not interest rates.
Other reasons for filing bankruptcy include young people who get in over their heads with credit card debt in college. About 10 percent of those filing bankruptcy are less than 25 years old. These young bankruptcy filers usually amass large student loans in addition to massive credit card debt while in college. Although most student loans are not dischargeable under current bankruptcy laws, unsecured debt, such as credit card debt, is fully dischargeable. Under current, new laws, people with the financial means to pay off the debt must do so, or at least make an attempt.
Filing bankruptcy is never easy, but there are many reasons why people decide to take this step. Filing bankruptcy is sometimes the only way out of a bad financial situation.