Major Reasons to File for Bankruptcy

As much of a stigma may be attached to bankruptcy, there are actually many valid reasons that you may want to take this step. It may be due to medical issues. It may be due to the loss of a job. It may be due to divorce. It may simply be due to getting in over your head. No matter what, bankruptcy is sometimes the best alternative because it offers you a fresh start with your credit. Here is an overview of some of the different reasons that you may want to file for bankruptcy.

*Medical bills

This is probably one of the biggest reasons that people often file for bankruptcy. When people are hit by unexpected illnesses or other health issues, it can take a toll on anyone’s good credit. There are few ways to be prepared for this horrible turn of events, and the calls from creditors only serve to make matters worse, adding even more stress on top of an already stressful situation. This is often a good time to file bankruptcy, because it gives you the option of being able to get out from under that mountain of debt that continues to grow.

*Job Loss

This is another of the things that may cause you to fall into financial ruin. If you have lost your job and can no longer pay your bills, you may want to consider bankruptcy. This will give you the opportunity to be free of those obligations that you can no longer handle. Of course, the most desirable course of action is to find another job that pays as much or more than you were making before, but that isn’t always possible.


When people get divorce, it affects their finances severely. The income that had previously been supporting just a single household now has to stretch to support two households. As a result, neither party may have the money to be able to cover all of the marital bills. One word of caution, however. If you are going to file bankruptcy in the middle of a divorce, at least ask your soon to be ex spouse if he/she wants to be included in the bankruptcy. Otherwise, you are simply sticking your ex with all the bills, and as satisfying as that may be, it is simply cruel, and creates even more bad blood than already exists.

*Getting in over your head

Unfortunately, nobody’s perfect. There are many people who get in over their heads, buying as much as the banks will let them before shutting down their credit lines. While this is certainly not a desirable position to be in, there are still those who get stuck in this position. As a result, they may wind up getting stuck far deeper in debt than they can ever get out of by themselves. Bankruptcy may be able to get these people out of the hole they have dug for themselves. The important thing to remember in this case is that if you are filing bankruptcy because you have gotten yourself in too deep is to make sure that you figure out how to budget your money so that it doesn’t happen again.

These are the most common reasons that people file bankruptcy. While there may be a select few who file bankruptcy because they simply do not wish to pay their bills, these people are few and far between. It is far more common that people file because they don’t see any other way out.