What Are Some of the Main Reasons for Filing for Bankruptcy?


Quick Answer

Some of the main reasons that people file for bankruptcy are job loss, medical expenses, misuse of credit, divorce and unexpected large expenses. A Harvard University study shows that medical expenses are responsible for most bankruptcy filings, as much as 62 percent of them, according to Investopedia, a website dedicated to providing trusted financial education for all people.

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Full Answer

Bankruptcy rates have taken a dramatic rise in the last few years as of 2015 as more and more people are unable to pay off their debts, states Investopedia. There are several habits that could possibly become reasons for filing bankruptcy.

Overspending on a house can lead to bankruptcy. Buying a large home leads to stacking expenses, and this could quickly lead to an overwhelming amount of debt.

Having access to many credit cards can lead to unnecessary spending and building debt. Paying off credit card debt with credit cards could cause problems due to fluctuating interest rates and the temptation to keep paying off one card with another.

If a financial hardship is present, ignoring it could lead to a bankruptcy down the road. Mounting debt, waning credit scores and spending beyond current means should all be addressed, however difficult, because an unwillingness to deal with current issues is one reason people find themselves heading toward bankruptcy.

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