Three most common types of debt that lead to bankruptcy in OH

Medical debt, credit card debt, job loss and divorce are the most common reasons why people declare bankruptcy in the U.S.

According to U.S. courts, just over 930,000 people filed for bankruptcy in 2014. Although this is a decrease from the 1.7 million people who filed for bankruptcy in 2013, people are still struggling with excessive debt that has sent them over the edge. Once Ohio residents can no longer make the monthly payments on their medical bills, credit cards and mortgages, many are forced to enter into the bankruptcy process.

Medical debt

According to a study published by Fox Business, medical expenses were the leading cause of bankruptcy in 2013, and played a major role in 2014 bankruptcies as well. The Affordable Care Act gives more people access to health care insurance. However, many people are still unable to pay for their costly medical deductibles, premiums and copays. Most insurance companies come with annual deductibles, or the amount of money that must be paid by the insured before the insurance plan will start paying on claims. Insurance plans that have low annual deductibles often come with high monthly premiums. An affordable monthly premium may result in high medical deductibles of up to $10,000 each year. As a result, some Ohio residents avoid medical treatment and stop taking their prescription medication in order to avoid high medical debt.

Credit card expenses

Credit card debt is another leading cause of bankruptcy in America. Some families struggle to pay their monthly bills and are forced to use credit cards to purchase daily essentials, like food and gas. In 2014, a survey conducted by BankRate.com found that just over half of Americans had enough savings to pay for their credit card debt. It isn't uncommon for credit card debt to get so out of hand that people are no longer able to keep up with the minimum monthly payments.

Job loss and divorce

Job loss is often unexpected, and many Americans are not financially prepared for unemployment. According to the National Foundation for Credit Counseling, people should have a financial reserve that will cover at least nine months of living expenses in case of a layoff. While some people are able to do this, many are not and must suffer the consequences if they end up losing their job.

Divorce is another often unexpected event that can lead to financial debt. Engaging in a heated divorce battle can cost thousands. This doesn't include the financial changes that occur when couples separate, and are forced to pay for their own living expenses.

When to seek legal counsel

People who are overwhelmed with financial debt and are struggling to keep their head above water may benefit from bankruptcy. Although it is used as a last resort, bankruptcy offers financial freedom to those overcome with excessive debt. An attorney in Ohio may be helpful in determining whether bankruptcy is right for you, and helping you through the bankruptcy process.

Keywords: bankruptcy, Chapter 7, debt