One of the most prevalent bankruptcy myths is that people who file for bankruptcy are personally responsible and that they have made some sort of financial mistake.
Often, you’ll hear people say that these individuals are just reckless spenders, for example. Maybe they took out multiple credit cards, maxed them all out even though they knew they couldn’t pay them back, and then realized they had no options other than bankruptcy. This is often sad with an obvious negative connotation.
It’s also blatantly wrong. It’s not that no one has ever had to declare bankruptcy because of a credit card, but the truth is that some of the most common reasons for bankruptcy filings are things that totally happen outside of your control. You’re probably not to blame at all.
Unexpected medical events
For example, one of the most common reasons that people file for bankruptcy in America is that they have some unexpected medical bills. A person could make sound financial decisions for their entire life, experience a heart attack or a stroke, and then have more medical debt in just a few days than they’re ever going to be able to pay off in their life.
Another reason that people file for bankruptcy is wage loss. This is often the same as job loss, but not always. Some people simply start earning less money. This could encompass business owners in a recession. It could also include workers who lose their job and then find another one, but the new job doesn’t pay as much. Some workers may also see their hours cut, or tipped workers may simply not earn as much in tips as they anticipated.
There are a lot of reasons for wage loss, and many of them are things that the workers can’t control. This can quickly make everyday debt unaffordable.
If things have happened to you that have forced you into overwhelming debt, you want to look into your options. This may include declaring bankruptcy to eliminate or re-organize that debt.