People sometimes make the mistake of assuming that bankruptcy always happens because a person made poor financial decisions. Maybe they took on too much debt. Maybe they had reckless spending habits. Maybe they just weren’t smart with their money and they lost everything.
However, these assumptions are inaccurate in the vast majority of cases. Most of the time, bankruptcy isn’t because of a mistake that the person made or any unavoidable errors. It’s just because of factors outside of their control, which have forced them into bankruptcy against their will.
Reasons for bankruptcy
To see how this applies, you just need to look at some of the most common reasons for bankruptcy in the United States. These include issues like job loss, income reduction and high medical bills.
But, how much control does any individual person have over these costs? Say that you were part of recent layoffs while working in the tech sector. You did not do anything wrong, but many tech companies are laying off workers, so you lost your job.
Or, maybe you are suffering from a serious disease. You needed medical treatment that was not going to be covered by your insurance plan. You ended up having to take on overwhelming medical debt, but it was the only way to address your health issues. Once again, none of this is your fault or based on decisions that you made. You just happened to get sick.
Filing for bankruptcy
It is important to keep this in mind while filing for bankruptcy, as some people deal with guilt. But the truth is that bankruptcy is merely a useful legal tool, it can be helpful to know how you can use it in your situation.