What Reasons Force People into Bankruptcy

A study conducted relating to bankruptcies filed back in 2010 lists the 10 main reasons why people were filing bankruptcy that year. It showed:

1. Medical Expenses (42%)

2. Job Loss (22%)

3. Uncontrolled Spending (15%)

4. Divorce (8%)

5. Unexpected Disaster (7%)

6. Avoiding Foreclosure (1.5%)

7. Poor Financial Planning (1.5%)

8. Preventing Loss of Utilities (1%)

9. Student Loans (1%)

10. Preventing Repossession (of personal property like a car)  (1%)

From this listing it is clear that, at least in 2010, serious illness, job loss and divorce are major drivers of the decision to file a bankruptcy case. A more recent examination done at Harvard University in 2012, shows that hefty medical expenses, drove even more people in to bankruptcy. This study listed five main causes of bankruptcy:

1. Medical Expenses (62%) – 74% of whom did have health insurance

2. Job Loss particularly when it causes people lose health insurance and the extension of benefits via Cobra plans

3. Poor/Excess Use of Credit

4. Divorce and Separation

5. Unexpected Expenses

The fact that both studies continue to show similar results illustrates the consistent trends driving people’s decisions. It will bear watching over the next few years whether the increase in the number of people with health insurance under the Affordable Care Act and the additional protections those people receive in terms of ability to get covered for pre-existing conditions and the inability of insurers to deny people due to annual or lifetime caps will cause any reduction in the trends that are reflected by these studies.

At the Law Office of George “Dave” Giddens, P.C. our attorneys serve Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. And we have bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases in New Mexico. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Our conveniently located office has ample free parking and is easily accessible by public transportation. We offer flexible office hours upon request. To make an appointment for a consultation about your real estate matter, contact us online by visiting the firm’s website at giddenslaw.com. or call us at (505) 633-6298. Giddens & Gatton Law, PC is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico/