When it comes to personal financial struggles, many California residents hold a number of misconceptions about the situations that others face. This is especially true in regard to the reasons why individuals or families file for bankruptcy. It is often assumed that personal bankruptcy is the result of years of irresponsible spending or other forms of financial mismanagement. In reality, however, the reasons why people file are often based on influences beyond their immediate control.
For example, medical bills are one of the top causes of financial turmoil that leads to bankruptcy. A sudden illness or injury can wreak havoc on a family's budget, and many Americans simply do not have the income or savings to accommodate the staggering cost of medical care. Many will struggle to stay on top of medical bills for a period of time, but the costs eventually mount to a level that cannot be sustained. At that point, personal bankruptcy may be the only way out of insurmountable debt.
Another example lies in the sudden loss of a job. When a family member loses his or her income, household expenses quickly begin to pile up. Some families will turn to credit cards to cover their living expenses, hoping to pay those debts down when a new job is found. In many cases, however, the period of unemployment lasts far longer than anticipated, and the resulting debt is too substantial to repay. Here again, many individuals will work long and hard trying to pay these obligations back before finally turning to bankruptcy as a lifeline.
When considering the reasons why other people choose to file for bankruptcy, California residents should remember that it is impossible to know the full range of factors that lead up to such a decision. Bankruptcy is not viewed as a "get out of jail free" card. Instead, it is a financial tool that exists to provide individuals with the chance to regain financial stability and participate in the economy once again.
Source: The Huffington Post, "Top 10 Reasons People Go Bankrupt", March 24, 2015