Whether you’re in the bankruptcy boat or you’re just curious on why people declare bankruptcy, there are a million reasons why people do but should you do it?  There are plenty of downfalls and upsides to declaring bankruptcy but you really have to look into why people declare bankruptcy in the first place.

Large amount of credit card debt – One of the main reasons people declare bankruptcy is simply because of their high credit card debts.  If you have a large bill that will be close to impossible to pay off, you may have no choice but to declare.  Many of the main reasons people have high debts are from out of control spending, medical bills, and divorces.

Medical bills – We all know that medical bills are expensive and if you’re one of the millions that don’t carry health insurance, you can find yourself in the debt boat very quick.  Heck, one surgery can cost you $100,000.  That’s not a pretty penny.  Like the credit card debt, if you know you won’t be able to pay it off in the next 10-20 years, you’ll be screwed over and will have no choice but to declare bankruptcy.

Divorce- Some divorces go very bad.  Some people will find that their spouse racked up thousands of unwanted dollars on their credit card.  Like I mentioned above, when you have unwanted credit card expenses and attorney fees, these numbers can sky rocket.

Declaring bankruptcy should be your last resort because it’s not going to be an easy process like it was in the early to late 1900s.  The process is very strict in today’s world and they will go through everything you own, have to owe, etc before they even consider it.  My general rule of thumb is that if you owe about four times to five times what you make a year and you have no intentions on making more money, you’ll have to go down this route.

What you should know –

Don’t feel that you have to declare.  It may sound hard but you can simply pay the minimums, go back to college, get a new or part-time job and attack that debt.  Transfer balances to a 0% interest card.  Look at everything possible before you take the easy way out.  YOU owe those people the money.  Don’t just think it’s a free ticket out of debt because it’s not.