I’m always a little surprised by the questions I sometimes get when I tell people I’m a bankruptcy attorney. People ask things like, “Isn’t bankruptcy like stealing?” ” Do your clients go out and run up their credit cards on big screen TVs before they file?”
None of these things are true, but unfortunately bankruptcy carries with it many misconceptions. I’d even bet that if you’re thinking about bankruptcy, you’ve thought some of these things yourself. I have yet to have someone come to me just because they’ve run up credit card bills for unnecessary things. Instead, they’ve found themselves facing an unexpected situation and have gotten to the point where they can no longer make ends meet.
Here are the top three reasons why my clients file bankruptcy:
Unemployment – The employment market is just not as stable as it once was. Even my clients who thought they were insulated from unemployment, people with technical degrees and graduate degrees, have found themselves caught off guard. Although they’re eligible for unemployment benefits, they’ll only get a fraction of what they were earning. Suddenly, they don’t have the income they need to pay their debt and are struggling to pay necessities like their mortgage and food expenses.
Medical Expenses – Many of my clients don’t have health insurance, or they’ve been struck with medical expenses while they were unemployed and uninsured. If you’ve ever taken a trip to the emergency room, or even the dentist, you know how quickly medical expenses can add up. And don’t expect one bill from just the hospital. You’ll get bills from the doctor, the radiologist, the lab, and who knows who else. Before you know it, you’ve lost track of just what you owe. These out-of-left-field expenses leave my clients struggling to get a handle on their expenses. The last thing my clients want is to leave these doctors and nurses on the hook for all the help they’ve gotten. But if it comes down to paying these bills or providing for their families, oftentimes the best option for my clients is to file bankruptcy and get a fresh start. Keep in mind that timing can be crucial. If you incur more medical bills after you file, those bills won’t be discharged by your bankruptcy. You’ll have to wait several years before you can file again. You may want to wait to file until you’ve gotten health insurance and don’t have to worry about more medical expenses.
Divorce – Divorce can be one of the hardest things a person can go through. My clients who are going through, or have gone through, divorce are experiencing a great deal of loss, both emotional and financial. Debt which seemed reasonable when there was a two-income household now seems insurmountable. Divorce and bankruptcy also requires consideration of timing. While the general recommendation is to file bankruptcy before the divorce, it can sometimes be beneficial to wait until all the property issues have been resolved. Also, special considerations can arise if you promised to pay your ex-spouse’s debts as part of your divorce.
If you are going through a divorce, have been unemployed, or recovering from unexpected medical issues, you may want to consider scheduling a consultation with a bankruptcy attorney. Our consultations are free and require no obligation. If we don’t think bankruptcy is your best option, or if we don’t think we’re the best law firm for your needs, we’ll tell you.