While many people would like to dispute it, numbers don’t lie. The American Journal of Public Health recently ran a study which discovered medical debt accounts for 66.5% of all bankruptcies.
See also: Tips for Tackling Medical Debt.
Student loans account for 32%. That means only 2% of bankruptcies are caused by credit card debt.
See also: In the News: Relief for Student Loans.
And a quarter of those who get into bankruptcy for credit card debt do so because they were using their credit cards to purchase basic necessities.
Bankruptcy is not a moral failing.
These figures utterly dispute the myth that bankruptcy happens because modern Americans are fiscally irresponsible. They’re happening because people get sick, get into major accidents, or are underemployed. It happens because they’re weathering job losses, and because inflation has outpaced wages by an overwhelming margin.
If you’ve been avoiding bankruptcy because you’re embarrassed or because you think you’ve committed some kind of a moral failing by getting into financial trouble, give yourself a break.
You can bounce back.
Chris Wolfington, CEO and Founder of Pennsylvania’s FinPay, had to file both Chapter 11 bankruptcy for one of his business ventures and Chapter 7 bankruptcy because the he’d accepted certain business liabilities.
Now he’s the head of a company who has hired 26 other people and which is worth 5 million. His company exists to make it easier for patients to pay their hospital bills.
Bankruptcy gives you a fresh start. And yes, you can get credit after you file. All of our clients got car loan offers and credit card offers after bankruptcy. Get your credit to the right spot, and you can get a mortgage as early as two years after your discharge.
Most people wait too long.
Unsure of how bankruptcy works, what it means to file, or whether they really ought to pay their debts, most individuals try to pay their debts long after they have reached the tipping point. What’s the tipping point?
Any sign you can’t make ends meet, any time you’re using credit cards to pay other debts, any time you’re under financial stress.
Be realistic about whether you’re ever going to be able to pay off your debt. Take a long look at your situation and decide where you ought to place your energy and attention. NerdWallet reports the longer people wait to file bankruptcy, the less they get out of it.
Still not sure? Call us for a free consultation. We can take a look at your total financial picture, and we can tell you whether bankruptcy is right for you.