When life is going well, it can feel like you’re on top of the world. Your job, relationships and personal goals are in line and moving forward positively. However, life can change in an instant, pulling the rug out from under your feet and leaving you lost, confused and unsure about your next steps. Having to file bankruptcy in Michigan is a life-changing event that can leave people disoriented. Financial hardships are nothing to be ashamed of and can affect everyone. Here are four main reasons people may end up needing to file bankruptcy.
1. Medical Bills
Even those with the best health insurance can find themselves drowning from unexpected health expenses. From work-related injuries to car accidents and life-threatening diagnoses, medical bills come out of nowhere and quickly consume all your financial resources. Many people think that having health insurance means they can’t get caught up in a medical mess, but studies show over 70% of people who did file bankruptcy had health coverage.
2. Losing A Job
When you plan your monthly expenses, you expect that you’ll be employed and working a job that covers your lifestyle choices. While it’s imperative to have an emergency fund if you do lose your job, that money can depreciate very quickly, depending on how long you stay unemployed. Once someone is without work, keeping up with their mortgage, rent or family expenses can quickly become too much, leading to a bankruptcy filing as one of their only options.
When a couple splits up, it already causes increased mental and emotional strain on both people involved and their families. However, on top of the fees associated with legal counsel, filing for divorce can mean a significant loss of financial resources or the possibility of taking on your ex-partner’s credit card debts if you opened the accounts together. All of these lifestyle changes can be too much for some people’s financial situations, so bankruptcy becomes the only option for many people going through a divorce.
4. Uncontrolled Spending
In today’s day and age, it’s so easy to open credit cards and think you’re financially stable if you keep getting approved. However, this can be a major downfall for people if their debt becomes unmanageable. As interest builds and monthly payments stack up, many people fall behind. Creditors are ruthless, and your credit score will ultimately start to fall making it harder to qualify for more credit. Getting in over your head with debt becomes the catalyst for a lot of people who have to file bankruptcy.
Even if you manage your money, accounts and expenses in the most responsible way possible, sometimes you just can’t avoid life and its unexpected tragedies and events. These events can leave people unprepared and unable to manage everything they’re involved in financially, leading to a bankruptcy case. If you find yourself in this situation, know the effects aren’t forever, and there are resources to help you figure out your next steps to get you back on your feet financially.