Due to the large impact that unexpected expenses can have on a person’s finances, bankruptcy is something that can happen to even the most diligent of budget keepers. In fact, United States Courts data listed on the uscourts.gov website shows that there were almost 910,000 personal bankruptcy filings in 2014. But what are these unexpected expenses that are causing so many Americans so fall into debt? Here is a look at some of the leading causes of bankruptcy in the U.S.
Medical Bills
The unfortunate truth is that unpaid medical bills are currently the number-one leading cause of personal bankruptcy in U.S. Sometimes, all it takes is one unexpected car accident or diagnosis to send a family into debt. According to an article published by NerdWallet Health in March of last year, about 20 percent of Americans struggled to pay their medical bills in 2013, with 60 percent of bankruptcies filed that year being a result of medical bills.
Job Loss
Rarely does “job loss” appear as an anticipated expense in a family budget, yet thousands upon thousands lose their jobs every year due to company budget cuts. CNN Money reported last July that Microsoft had plans to cut 18,000 jobs within the next year, and just this past January CNBC reported that American Express planned to cut 4,000 jobs in 2015. Job loss can put a particularly difficult financial strain on families, especially when employment gets harder to come by as more and more companies eliminate jobs.
Misuse of Credit
Though this is not the number-one cause for personal bankruptcy in the U.S., it is perhaps the most commonly deemed culprit—and for good reason. NerdWallet reports that in 2014, the average indebted American household owed $15,611 in credit card debt.
Unexpected Expenses
Many other unexpected expenses can enter into the picture as well, causing an individual or a family to suffer tremendously financially. Car repairs, lawsuits, natural disasters, house fires—all of these things, especially when more than one of them happen within a short amount of time, have the potential to send a person into bankruptcy.