Top Five Reasons People File Bankruptcy in Illinois

Although people file bankruptcy for various reasons, there is normally a common denominator. At least for the most part, the circumstances leading to the filing were beyond the debtors’ control. The Bankruptcy Code was written with people like this in mind. There is no other way for these honest yet unfortunate debtors to get a fresh start.

Whatever your reason for filing, a Chicago bankruptcy attorney makes the process much easier. Only an attorney can give you solid legal advice about your various options. Additionally, only an attorney gives you peace of mind during a time when peace of mind is often in short supply.

Medical Bills

This post could stop here. Medical bills trigger about two-thirds of bankruptcy filings in Illinois. The Affordable Care Act was supposed to slash the number of medical bankruptcy filings. But the latest research based on ten years of Obamacare clearly shows that’s not the case.

Medical bankruptcies are especially common among older Americans, many of whom are caught in a perfect storm. Life expectancy is rising at a time when the social safety net is shrinking. Additionally, even if Medicare does cover all medical expenses, it usually only pays 80 percent. 20 percent of a cancer treatment bill is a lot of money.

Younger Americans are also feeling the pinch. Generally, these families do not have the resources to pay large, uncovered expenses out of pocket. And, hospitals usually refer unpaid accounts to aggressive debt buyers faster than other creditors.

Job Loss/Economic Downturn

No one wants to get sick, and no one wants to lose a job. Lifestyle sometimes contributes to medical issues, but for the most part, illness strikes randomly. Likewise, most people have some control over their own careers, but this control is limited at best.

Most families live from paycheck to paycheck. Even a few weeks without an income often triggers a snowball effect. Frequently, these people turn to credit cards to help make ends meet during these times. That strategy is only sustainable for a couple of months, at most.

There is a silver lining. A temporary job loss makes it easier to qualify for both Chapter 7 and Chapter 13 bankruptcy. So, these families have more legal options.

Divorce/Separation

Marriage dissolution almost inevitably lowers the standard of living for everyone involved. Divorce increases monthly expenses. Instead of paying half the mortgage, many divorcees must suddenly pay the whole thing. Other divorcees pay thousands of dollars a month in necessary family support payments.

So, bankruptcy and divorce often go hand in hand. Generally, it’s best to file bankruptcy before filing for divorce, if possible. That arrangement simplifies the divorce property distribution process.

Death in the Family

To continue a familiar theme, a death in the family is usually unanticipated and always beyond the relative’s control. In addition to the staggering emotional costs, these events usually have direct and indirect financial costs. In addition to funeral and burial expenses, many families must face life without a primary wage-earner.

Bankruptcy helps these families pick up the pieces and move on. That’s what the decedent would have wanted.

Overspending

Sometimes, this final category is a standalone category. A few people spend recklessly for long periods of time. But typically, overspending is a collateral effect. For example, as mentioned, many people who lose their jobs use credit cards to pay living expenses. In most cases, bankruptcy erases this debt, so a family can have a fresh start. 

Rely on Experienced Lawyers

If you need to file bankruptcy, the financial distress you are experiencing is seldom your fault. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html