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Chicago Bankruptcy Lawyer > Blog > Bankruptcy > Why Does A Person File Bankruptcy?

Why Does A Person File Bankruptcy?


The simple answer is people file bankruptcy because they owe more than they can pay. Generally, if you spend more than about a third of your income on mortgage debt, credit card debt, and other fixed monthly obligations, that’s too much debt to comfortably repay. Families in this situation have basically two choices. They can wait and hope things get better, or4 they can do something to make their financial futures a little brighter.

Admitting the need to file bankruptcy is an important step. Partnering with the right Chicago bankruptcy lawyer is even more important. Only an experienced lawyer correctly and strategically completes the complex bankruptcy paperwork. Furthermore, only a lawyer stands up for your legal and financial rights in court. Finally, only an attorney gives you solid legal advice throughout the bankruptcy process.

Job Loss/Business Downturn

Most people have little or no savings. They’re doing well to live paycheck to paycheck. Therefore, a temporary income disruption, like a few months without a paycheck, often has devastating consequences.

Many people also drive for Uber or have other side hustles. So, they’re vulnerable to business downturns. Frequently, to make up for the lost income, people don’t make estimated tax payments when times get lean. This failure creates a whole series of other problems when this income tax comes due. Back taxes, when combined with penalties and interest, are difficult or impossible to pay.


Much like unemployment or business downturn, very few people want or anticipate a divorce or separation. But such events have massive financial repercussions.

Almost overnight, divorced or separated spouses must often maintain households on half as much income. Furthermore, many spouses must pay significant child support, alimony, and other FSOs (family support obligations).

One of these things is enough to throw a budget into chaos. The combined effect of these two things is usually difficult to recover from.

For this reason, divorce and bankruptcy usually go together. Our Chicago bankruptcy lawyers usually recommend that people file bankruptcy before their divorces are finalized. A bankruptcy filing makes a marital property division less complicated and therefore less expensive.

Serious Illness

Cancer treatments and other chronic serious illness treatments often cost tens of thousands of dollars a month. Even if the patient has health insurance, these policies normally only pay a portion of these costs.

Medical providers quickly refer delinquent accounts to debt collectors. These debt buyers are very aggressive, especially since the Supreme Court has made several recent consumer-unfriendly rulings in this area. Additionally, unlike doctors, debt buyers have no relationship with the obligor. So, they don’t care about any extenuating circumstances.


The three most common causes of bankruptcy filings are either mostly or totally beyond the debtor’s control. Overspending is different. For the most part, we all chose what we buy and when we use credit cards.

Generally, overspending is a contributing factor, as opposed to a primary cause. For example, if Phil loses his job, he may live on credit cards for a couple of months. That approach may work in the short term, but it’s financially devastating in the long term.

 Count on a Hard-Working Cook County Lawyer

No matter what kind of financial problem you are having, a solution is usually available. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.



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