What Are the Most Common Causes of Bankruptcy in Arizona?
Bankruptcy may seem like a last resort solution for financial troubles but it occurs much more frequently than you would think. United States Bankruptcy Court District of Arizona data for 2017 suggests that there have been 15,296 bankruptcy filings in Arizona – an increase of 4.4 percent on an annual basis. What are the most common causes of bankruptcy in Arizona? Is this option the right one for you? There are two common sets of circumstances that contribute to such filings – a dramatic increase in debt or a noticeable decrease in income.
Medical debt has been ranked as the number one cause of bankruptcy filing across America. Statistics show that more than a quarter of US families struggle with their medical bills. Even people who have good insurance could experience financial difficulties in the aftermath of a medical emergency.
There’s a simple reason why medical problems often lead to dire financial circumstances – they cannot be planned for. Insurance, as comprehensive as it may be, will usually not cover all of the expenses that accumulate during a patient’s treatment.
According to Harvard University, medical emergencies are behind 62 percent of the personal bankruptcy cases in the US. Arizona is far from an exception from the general rule.
The unexpected loss of one’s job or a primary stream of income will also contribute to one’s inability to make timely debt payments.
Many families in Arizona do not have sufficient savings to carry them through such a period. Even if they do, a prolonged termination of employment without a new career opportunity ahead will lead to debt accumulation.
Financial advisors recommend having at least six months’ worth of savings to address unexpected situations like the loss of an income stream. Needless to say, few people are diligent enough with their financial planning to feel comfortable with all of the payments they have to make while unemployed.
Yes, an Arizona divorce is one of the most common causes of bankruptcy in Arizona.
For many couples, the legal dissolution of the marriage can contribute to tremendous financial burden. The legal process itself could be expensive, especially if the split isn’t amicable. Division of marital assets, alimony and child support payments will also pile up.
The effects of having a reduced income after the split shouldn’t be underestimated either.
Divorce can be quite stressful financially, especially in the beginning. Some of the debt that cannot be handled can be discharged via a bankruptcy. While child support and alimony obligations aren’t dischargeable, the bankruptcy could reduce or eliminate other types of debt altogether.
Accumulation of Unexpected Expenses
Life doesn’t always unfold according to a plan. Even if you have sufficient savings and you set long-term goals, you never know when disaster or unforeseen circumstances could eventually strike.
Natural disasters, the loss of property and the lack of insurance will all lead to excessive financial trouble.
Unplanned trips, vehicle breakdowns at the worst possible time – these are events that could derail just about anyone’s financial plan for the future. While the emergency is being handled, payments on loans will be postponed. Eventually, the amount of debt that has accumulated could be impossible to address in the aftermath of unexpected circumstances.
If you are dealing with any of the above-mentioned situations, bankruptcy could be the right option for you. In theory, things appear to be simple and clear cut. In real life, it will be nearly impossible to tell if you need bankruptcy or an alternative option like debt settlement. The smartest thing to do in such a situation is talk to a bankruptcy attorney. Such a professional will analyze your current situation to give you a better idea if bankruptcy could help you get back on your feet.