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So why do you think that people go bankrupt? There are many different reasons. Let’s consider a few.

Medical Expenses

A recent Harvard University study showed that medical expenses account for approximately 62 percent of personal bankruptcies in the US. Interestingly, the study also showed that 72 percent of those who filed for bankruptcy due to medical expenses had some type of health insurance, thus debunking the myth that only the uninsured face financial catastrophes due to medical-related expenses.

Reduced Income

Companies are cutting down on their expenses; and for many employees, this results in major pay cuts and reductions in bonuses. The end result of employees can include bankruptcy.

Job Loss

Even if there’s substantial severance pay, job loss can quickly deplete one’s savings and assets. Plus, job loss brings extra expenses such as COBRA insurance — and there’s no guarantee as to when a new job will be forthcoming.

Credit Debt

Credit debt isn’t just a result of irresponsible spending. It can also pile up due to catastrophes such as illness and disability, job loss, emergency expenses, or unexpected income reduction. Here are some good tips on how to reduce your credit card debt to help avoid bankruptcy.


Divorce is a costly business, even without counting lawyers’ fees. Divorce and separation can also mean a significant loss of income and assets for either or both partners. It may also mean taking on a portion of your partner’s debt if you co-signed or opened joint accounts with them.

Unexpected Expenses

Emergencies can hover just around the corner, whether they involve a car breaking down, a tree falling on the roof or catastrophic storm damage. Just one of these events can quickly drain savings that took years to accumulate.

Student Loans

If you haven’t paid that student loan off yet, you’re not alone. Statistics show that student loans account for at least one percent of all U.S. bankruptcies, which translates to roughly 15,000 bankruptcies a year.

Utility Payments

For many of today’s homeowners, the rising costs of heating, air conditioning, electric light, and other necessities can quickly help pave the way to bankruptcy.


According to statistics, more than one percent of Americans have to file for bankruptcy in order to avoid foreclosure on their homes.

Bad Budgeting/Overspending

Thanks to inflation, managing money is harder than ever; and a combination of bad budgeting and uncontrolled spending can provide a shortcut to skyrocketing debt and bankruptcy. Here are some tips on how to create a healthy budget.

While bankruptcy can provide a sensible debt solution for some people, others have found that, by consolidating their debts, they can avoid the trouble and expense of bankruptcy and still take control of their finances. Whichever method works, the important thing is to start dealing with the situation as soon as possible because debt is one problem that, unfortunately, doesn’t disappear on its own.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida. For more information, go to our web site or call 727-335-7151.