MAJOR REASONS FOR FILING BANKRUPTCY

The major reasons for filing bankruptcy vary per geographical area.
Across the country, however, major reasons include:

1.        Uninsured medical expenses.
2.        Unemployment or underemployment (you are not employed at
the income level you have been employed at in the past)
3.        Divorce
4.        Small business
5.        Military service
6.        Adult children returning to the home with grandchildren

In Alaska, military service is a significant factor (see military service
persons in the index). In Alaska we also see a lot of underemployment
(for example, you once worked on the Slope and now you work in a
local retail store), and seasonal work (commercial fishermen,
construction, etc.) as contributing factors for filing bankruptcy.

Many of these factors are largely out of your control. If you have no
medical insurance and spend more than one night in the hospital, you
may face bankruptcy. If the average forty year old is unemployed for
one year, a bankruptcy is likely to follow, although perhaps two to three
years later. If you are injured on the job and receive any limited
worker's compensation, bankruptcy is likely to follow.

We often see high credit card use during periods of unemployment
which may include the payment of hospital bills or taxes. In my
practice, I would estimate that less than 25% of my clients face
bankruptcy due only to credit card use without additional underlying
problems, i.e., unemployment or medical expenses. Of this group,
many are unaware of the real cost of interest on credit cards, the over
limit charges, the late fees, etc. Remember that credit card companies
are not victims. Almost all of us feel a moral imperative to pay our
debts. However, if you are facing growing debt, try to look at the
cause(s) of your bankruptcy as realistically as possible as well as the
numbers.
BANKRUPTCY IS A FINANCIAL DECISION. The
question is whether this is the time that bankruptcy has become
necessary.
LAW OFFICES OF JENNIFER L. HOLLAND