Even today, for many people, there is still a stigma attached to bankruptcy. You might think that you could guess the type of person who files for bankruptcy, and the main reasons why.
However, we reckon you’d be surprised.
Despite what you might think, or your preconceived ideas about people who file for bankruptcy, it is very rare that our clients have overspent on credit cards or taken out loans to fund a lavish lifestyle.
Relying on Credit Cards
Instead of buying jewelry or designer clothes, or splurging on meals in fancy restaurants, our clients often need to use their credit cards just to make car payments, buy groceries or pay utility bills.
Rather than deliberately living beyond their means, or being extravagant, people come to us because they can barely support their families.
They’re not just poor people working minimum wage jobs and trying to look like they’re rich. They’re just as likely to be university educated, working in white collar management roles or business owners too.
These people suffered due to the recession too and perhaps now have a huge mortgage to pay on a house worth a lot less now than they paid for it. And before you say it, they’ve tried to sell it or negotiate a better mortgage, and can’t.
Many people are living from month to month with no savings, and so all it takes is a sudden expense such as car or home repairs, or unemployment to put them deep(er) in debt.
Those with college and graduate degrees are affected too. Despite having a degree and the associated student loans, recent graduates may not be earning enough to pay back their loans, find somewhere to live and travel to work.
This means that they sometimes rely on their credit cards and loans just to keep a roof over their heads, get to work, and eat. The interest on these credit cards can then push someone over the edge.
Life changing events
People affected include those after a life changing event, such as those who suffered an injury leading to a permanent disability, or someone supporting a family member with a terminal illness.
These people are now no longer able to work, and so don’t have the income to pay for their heating, home and household bills.
Wealthy sports stars and celebrities often file for bankruptcy too. A combination of bad financial advice or business decisions, a short career, and wanting to make the most of their hard work and sacrifices, can mean that even the best paid stars file for bankruptcy.
When people like Mike Tyson, who has earned millions, and even 50 Cent file for bankruptcy, despite access to the best financial advice in the world, it shows how easy it is for people with far lower incomes and no financial advice to struggle.
Bankruptcy affects everyone
Bankruptcy affects all classes, ages, genders, education, and social status. Whilst some people filing for bankruptcy will have overspent in order to live a lavish lifestyle, we can’t stress enough that the vast majority of our clients don’t.
Our recent blog post profiling 5 Typical Bankruptcy Clients really brought it home to many people, that they are in, or could be in, very similar positions to the type or people who typically file for bankruptcy.
Our series about Bankruptcy By State has revealed some surprising facts about bankruptcy across the USA.
Before reading this, you probably thought that you would be reading about irresponsible people who took out large loans to pay for fast cars, big houses, jewelry or who went on expensive holidays.
But instead you learnt that bankruptcy can affect anyone and everyone, and that your world can come crashing down in seconds. And that perhaps there shouldn’t be a stigma attached to bankruptcy.
If you’re struggling with debt and want to know whether filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy is right for you, then why not Contact Us at 612.824.4357 for your Free Evaluation today?