What are the most common reasons for filing for Chapter 7 Bankruptcy?

If you’ve been considering filing for bankruptcy, you’re not alone. In fact, more than a million people file for bankruptcy every year, with California leading the nation in bankruptcy petitions. Commonly, a personal bankruptcy filing is the result of an event or series of events outside the control of the debtor.

Chapter 7 bankruptcies tend to have one of three primary causes: unemployment, credit card debt, and medical bills.

Unfortunately, losing a job in this economy is not an uncommon occurrence and can lead to the need for a Chapter 7 petition. Losing your primary or even secondary source of income may reduce your ability to pay your mortgage or other bills in a timely manner. Our Los Angeles bankruptcy attorney can help you determine how much of your property may be able to be saved through the use of bankruptcy exemptions.

Credit card debt can also be a major factor in chapter 7 bankruptcy filings. Credit card debt rapidly adds up, often thanks to high interest rates and steep penalties for late or missed payments. Credit card debt may be the primary cause of a bankruptcy petition, but it’s just as likely to be a contributing factor, particularly when job loss or other debt and financial difficulties are involved.

Medical bills, however, are the most common cause of Chapter 7 bankruptcies, according to a Harvard study published in the journal Health Affairs. Although most of these families or individuals were protected by health insurance, they were either underinsured or they lost their insurance during the course of their health struggles, leading to the need for bankruptcy protection.

New bankruptcy laws may affect whether or not you qualify for Chapter 7 protection. If you are considering filing for bankruptcy, the guidance of our bankruptcy lawyer in California can be an invaluable asset for you.

Source: Bankruptcy Attorney Los Angeles

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