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Why do people end up filing bankruptcy?

Nobody makes it a life goal to file bankruptcy. It's not something you hope for or plan for. In fact, many put off considering it for far too long, ashamed or frightened by the unknowns ahead. Yet these same people often find great relief when they're no longer burdened with debt.

So what leads people down the road to bankruptcy?

In the vast majority of cases, it's not greed or overspending. It's not even financial irresponsibility. Instead, it's the perfect storm of big, unexpected life changes that suck people into the downward spiral of debt.

Below are three of the most common.

1. Job loss

Losing your job is never easy. It's tougher if finances were already tight. Even if you qualify for unemployment, these benefits are typically capped at around 50 percent of your prior wages.

Many people in this situation turn to credit cards, running up their debt simply to cover living expenses (and hoping they'll pay it off once they get a job). Yet this strategy often backfires. With staggering interest rates and finance fees, what started as a molehill can quickly become an unmanageable mountain of debt.

2. Divorce

Marriage isn't just a romantic partnership; it's a financial one, too. And divorce can leave your finances in shambles.

With two households to pay for instead of just one, your income probably doesn't go as far as it used to. You may also be swamped with attorney fees, court fees, child support and spousal support. If you're on the receiving end of child and spousal support, your standard of living still might be a far cry from what it once was. Even after downsizing, those with a comfortable pre-divorce financial picture may find themselves drastically shortchanged.

3. Medical problems

It's no secret that medical care is exorbitantly expensive in our country. Even if you have health insurance, you could still be faced with outrageous out-of-pocket expenses for a serious medical issue.

Not surprisingly, medical bills are the biggest reason why people file for bankruptcy in America.

Sometimes it's a life-threatening illness like cancer that triggers a seemingly endless cascade of medical bills. Yet even less serious conditions - such as a sprained ankle or chronic back pain - can rack up thousands of dollars in medical visits and treatments.

The good news

Unsecured debts like credit cards and medical bills can be discharged in bankruptcy. That means they're essentially erased.

If you're struggling with debt for any reason, considering speaking with a bankruptcy lawyer about your options. Bankruptcy might be a powerful way to get back on your feet.

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