Is Filing for Bankruptcy Common?

The short answer is yes, bankruptcy has become increasingly more common in the last 20 years. Previously there has been a huge stigma with filing for bankruptcy. However, in recent years households have chosen to file for bankruptcy in order to gain their life back and get a fresh start. The sigma has lessened because most bankruptcy results from things that are out of their control. It is not something that a person should be judged or criticized for. 

Bankruptcy is outlined in the United States constitution and therefore, a constitutional right. Without the protections of bankruptcy people and businesses would not be able to take certain risks. Families would not be able to start over after drowning in debt. Without the protection of bankruptcy, your debt could overcome you and your family for the rest of your life. 

According to the most recent stats, 1.5 million Americans are filing for bankruptcy every year. Recently, in Indiana, there was a total of 6,142 filings. Out of all filings, 73% were Chapter 7.

The three most common reasons people file for bankruptcy

The top three most common reasons Americans are filing bankruptcy are;

• medical expenses

Unexpected rare diseases or a form of serious illness can leave people with hundreds of thousands of dollars in medical bills. These medical bills can wipe out savings, retirement accounts, college funds, leaving no other choice but to file for bankruptcy.

• job loss

The second most common reason for filing bankruptcy is job loss. Unfortunately, three out of ten Americans do not have savings for unforeseen circumstances such as job loss. Americans have high mortgages, high (cobra) medical insurance, school tuition, and everyday expenses, and some often live beyond their means leading to financial hardship and debts quickly increasing. 

• excessive use of credit

As mentioned before many American tend to live beyond their means leading to a huge amount of debt. America is built unfortunately on a society of wants instead of needs, along with the pressure of “keeping up with the Joneses.” However, it is not always unnecessary spending that leads to bankruptcy. Studies show it’s a combination of medical expenses and job loss that leads to increased use of credit. Because of high-interest rates on credit cards and loans and no extra means of income to pay back debts. This is what often leads to filing bankruptcy. 

There are actually many benefits of filing for bankruptcy. Our experienced bankruptcy attorneys in Terre Haute will help guide you through the benefits of filing for bankruptcy and create a plan that works best for you to help you gain a fresh start. 

2022 Bankruptcy Statistics 

According to the most recent statistics did you know;

• 20% of bankruptcies are from well-educated people. Bankruptcy can really happen to anyone.
• 52% of men file for bankruptcy and 48% are female. The gap is close but both men and women file for bankruptcy for different reasons. Men tend to file because of a loss of a high-paying job. Women tend to file because of divorce. 
• 60% of bankruptcy are from people who earn an income of $30,000 or less. Most bankruptcy results from a low family income. 
• 64% of bankruptcy are couples that are married. Married couples are more likely to file for bankruptcy and chose to do so jointly to make it easier for them. 

Just remember rather than thinking of bankruptcy as a point of no return, think of it as a new beginning. 

Get your life back and let our law firm help you file for bankruptcy

At Rowdy G. Williams Law Firm, we are committed to ensuring that our clients are able to overcome the difficult legal obstacles that they may not be prepared to face without help. Your case is our case. 

If you are faced with bankruptcy, contact us for a free consultation, or simply give us a call at 812-232-7400. We are here to listen and provide you with the support and guidance you need.