Bankruptcy isn’t for everyone. In fact, sometimes it’s a bad idea. For instance, if your debt is less than a few thousand dollars, although it may seem high to you, there are better ways to handle it.

Bankruptcy is a last resort decision for people who are in over their heads and can’t get out. It’s not a convenient way to escape responsibility and wipe out your credit card debt. It’s also not a solution to student loans. If student loan debt is the sole reason you’re considering bankruptcy, apply for a student loan forgiveness program instead.

If you’re considering filing for bankruptcy but aren’t sure your situation is legitimate, consider the following 3 reasons people aren’t afraid to file:

1. Massive unsecured and secured debt

 Being underwater with massive debt is a big deal when you’re barely able to maintain a decent standard of living. When you’re working full-time and watching most of your money go to creditors, there’s nothing wrong with considering bankruptcy.

 Credit card debt, auto loans, and mortgages can quickly pile up as unpaid when you lose or change a job. It’s hard to catch up! Bankruptcy provides relief that allows you to start living again. Just be aware that not all debts will be resolved through bankruptcy.

Student loan debt is rarely forgiven

Currently, student loan debt is exempt from being wiped out in a bankruptcy, with a few strict exceptions. It’s not impossible to get student loan debt discharged, but it isn’t easy.

According to Dan Austin, author of Student Loan Debt in Bankruptcy: An Empirical Assessment, “If student loan debt is the main reason you’re filing for bankruptcy, your lawyer should tell you not to expect it will be discharged.”

There are situations where people have had success; though, short of a serious medical condition, you shouldn’t count on the same.

2. You’re deeply in debt, injured, and you can’t go back to work

 After a serious injury, going back to your usual occupation may be impossible, especially if you’ve suffered a traumatic brain injury (TBI). A TBI occurs when an external force injures the brain.

According to The Centers for Disease Control and Prevention (CDC), every year 1.7 million people suffer a TBI resulting in 275,000 hospitalizations and 52,000 deaths, costing $60 billion. Roughly 75% of TBI patients suffer concussions, but sometimes it’s much worse, like a coma.

The recovery time for a TBI is slow. Swelling and bleeding usually take a few weeks to develop, and brain chemistry can swiftly change. A person may not be able to open their eyes for a while, and it may take time for them to regain conscious awareness.

Sometimes a simple fall around the house is all it takes to cause a subdural hematoma, and the person can feel dizzy and unbalanced for months. They won’t be able to drive or perform tasks that require alertness and dexterity.

It’s ideal to pay back everything you owe, but it’s important to be realistic about your circumstances. If you can’t make ends meet due to your situation, it’s not worth giving away the money you need to survive.

   3. Towering medical bills

NerdWallet data reveals medical bills as the biggest cause of bankruptcy. Millions of people file every year to relieve the burden of towering medical bills they’ll never be able to pay.

Not everyone with medical bill debt files. There are approximately 56 million adults between the ages of 19 and 64 who struggle financially with healthcare bills. That includes people with health insurance.

Deductibles and out-of-pocket costs are high, and coverage seems to be far less than it has been in the past.

Medical bills aren’t your fault. Don’t feel guilty for filing for bankruptcy because you chose to take care of yourself at the expense of being in debt. If you’ve made a sincere effort to work with insurance and it’s not getting anywhere, bankruptcy may be your key to relief.

    4.You don’t need to play the credit game anymore

 Once you’ve had credit cards, car loans, and a mortgage, you know how the game works. If you’re one of the rare people who no longer want to play the credit game, start living without credit.

After you file for bankruptcy, it will be on your credit report, but as long as you don’t have any evictions you won’t have a hard time finding a place to live. You can always rent from a private landlord, or rent a room from someone in a private home. Buy a used car and pay in cash. By living simply, you’ll find more peace of mind.

Categories: Debt