While many people feel embarrassed about falling behind on their bills, most Americans have debt they cannot afford at one time or another. In fact, most bankruptcies result from causes beyond the person’s control. Most families have less than $1,000 in savings in case of an emergency.
Review the top three causes of bankruptcy in the United States.
Job loss
Unemployment often results in difficulty paying bills, especially for people who do not find another job right away. As of March 2021, the National Conference of State Legislators reports a national unemployment rate of 6%. You may find yourself depleting your emergency account and turning to credit to pay regular expenses, both risk factors for future bankruptcy.
Medical debt
A 2019 study published in the American Journal of Public Health reported that more than 66% of people who file for bankruptcy in the U.S. do so because of medical debt. Despite the passage of the Affordable Care Act, an unprecedented number of Americans still lack access to affordable, high-quality health care.
Divorce
Budget problems often result from the transition from a two-income household to two single-income households after divorce. More than 24% of participants in the AJPH study report divorce as a significant cause of their decision to file for bankruptcy.
Understanding the factors that contribute to mounting debt can help inform the decision about whether to file for bankruptcy for Utah residents in this situation. Most people who file for bankruptcy experience one or more of these situations in addition to foreclosure and student debt.