| Illustrates the main causes of bankruptcy filings in the | | | | drivers who have been involved in auto accidents |
| United States. | | | | without insurance. These drivers are typically given |
| Can You Guess The Main Causes Of Bankruptcy | | | | three options: Pay the actual damages to the |
| Filings? There are several common causes leading | | | | person(s) involved in the accident; work out an |
| one to file bankruptcy. These include, but are not limited | | | | installment payment plan to pay the damages to the |
| to the following: | | | | person(s) involved in the accident; or file bankruptcy |
| 1. Lawsuits/Garnishments | | | | and send proof thereof to the motor vehicle licensing |
| Nobody wants to be sued and brought to judgment. | | | | department. If the person continues to drive without |
| Nobody wants to have 10%-15% of their hard earned | | | | rectifying the situation, they risk arrest and/or |
| wages deducted from their pay. In many cases, the | | | | imprisonment for driving on a suspended license. |
| taking of 10%-15% of one's wages leads to the inability | | | | 6. Foreclosures |
| of that person to pay his rent, utilities or auto payment. | | | | The pride and joy of being a homeowner can be |
| Just the thought of the employer potentially having to | | | | easily tempered by the hard work and cost of |
| garnish wages leads many to panic. Debtors do not | | | | maintaining the home. The mortgage needs to be |
| want their employers or co-workers knowing of their | | | | timely paid no matter what your special circumstance |
| financial troubles. | | | | may be. Real estate taxes and homeowner's |
| 2. Auto Repossessions | | | | insurance are also required to be paid regularly or you |
| Auto lenders will do whatever it takes to get you | | | | face a foreclosure suit. Changes in employment, health, |
| financed, regardless of whether you are actually | | | | income and marital status can lead to one's failure to |
| capable of affording the car. They realize that if you | | | | make timely payments. Many take second mortgages |
| can't pay the installment, they can take back their | | | | or lines of credit which simply create an additional, |
| vehicle and re-sell it before it fully depreciates. They do | | | | financial burden on the homeowner. When faced with |
| this through the use of auto auctions where the vehicle | | | | the reality that they cannot afford the home, debtors |
| often sells for substantially less than what is owed. | | | | can vacate the home and extinguish any mortgage |
| This leads to a deficiency amount which the lender | | | | liability through Chapter 7 bankruptcy. |
| seeks to recover from the debtor. | | | | 7. Overzealous Lending |
| 3. Unpaid Medical Bills | | | | How many credit card applications have you received |
| With more and more Americans going without medical | | | | in the mail this year? If you are like many Americans, |
| insurance (45.8 million, per the U.S. Census Bureau | | | | the applications continue to appear regularly. Have you |
| press release dated 8/30/05), they risk losing | | | | received convenience checks or offers for additional |
| whatever they have earned throughout their lifetime | | | | lines of credit? If so, you may have taken advantage |
| should a major medical problem occur. Most claim that | | | | of the use of the credit without any feasible way of |
| they can't afford to carry medical insurance. In reality, | | | | repaying the debt. Many people are receiving |
| they can't afford not to. The rising cost of health care | | | | pre-approved credit applications when they are in fact, |
| could significantly deplete one's savings should a | | | | not credit worthy. The credit card lenders point fault at |
| serious illness or injury occur. Even those with | | | | the debtors for accepting the credit without the means |
| co-payment coverages are having a difficult time | | | | to repay it. It seems more logical to fault lenders who |
| meeting their burden of the bill. | | | | do not undertake to check the credit worthiness of |
| 4. High Interest Loans | | | | particular debtors. |
| There have always been high interest personal loans | | | | 8. Consumer Overspending |
| from many sources. In recent times, the advent of the | | | | Many people see what they want, acquire it, and |
| payday loan has surfaced. These loans have | | | | decide later how they will pay for it. People want to |
| exorbitant interest, which is often carried over and | | | | possess the latest clothing, jewelry, electronics, etc. |
| extended further by way of additional loans. People | | | | Most stores now offer the ability to take the product |
| who cannot survive until their next payday are giving | | | | home through the use of store credit cards or outside |
| up a huge portion of their paycheck to get the money | | | | financing. You may even get a modest percentage |
| in advance. This dangerous cycle leads to further | | | | discount off the purchase price if you open or use the |
| borrowing with less and less money actually going into | | | | store charge card. Many people charge their groceries, |
| the individual's pocket. | | | | restaurant and transportation expenses believing that if |
| 5. Driver's License Suspensions | | | | they just make the minimum payments everything will |
| Many states have begun to suspend the licenses of | | | | be alright. |