financialcounselor

The Real No. 1 Reason why People File Bankruptcy

In Uncategorized on April 13, 2012 at 10:58 pm

It ain’t because of excessive medical debts

Whenever I hear a news story about bankruptcy filings in the United States, the report always–and I mean always–says that the most common reason why people file personal bankruptcy is because of excessive medical debts.
I don’t know where these reporters get their statistics, or what bankruptcy filers they’re talking to, but there’s no way these stats can be true.
At my job I talk to people all the time who are in the process of filing for bankruptcy protection. And when I ask them why they are filing, the answer almost every single time is the exact same: “Credit card debt.” Sometimes the reason they give is high medical bills, but not normally. I mean it’s not even close. And I talk to a lot of bankruptcy filers.
When a person tells me they’re filing bankruptcy because of credit card debt, I ask what caused them to rack up the debt, and they sometimes will tell me it’s because they incurred high medical bills.” But not usually. Usually they say they had to live on credit cards after they lost a job. Or they tell me their credit card debt just grew slowly over a long time until their money got tighter and tighter. And after a while the point came when there just wasn’t enough income to keep up with all the bills.
I don’t know if the reporters who do these stories only interview people they meet in hospitals or what, but from I see everyday, it’s credit cards driving up the bankruptcy rates.

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