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The pitfalls of debt

If you have more money going out than you have coming in, you probably won't be able to sustain it for long. After a few months of you paying less than the minimum or skipping payments, your creditors will become impatient. You may begin to receive letters or phone calls warning you of what you already know - you are falling behind.

When this happens, you may see some changes in yourself, if you haven't already. For example, you may lose sleep, become irritable or have trouble eating. Money trouble may also take its toll on your relationships. In fact, there are very few areas of your life that your financial struggles will not affect.

The most common reasons why people file for bankruptcy protection

A recent Harvard University study revealed that 62 percent of those filing for personal bankruptcy do so because of medical debt. Even if you have health insurance, there is a good chance that medical expenses caused or contributed to the financial difficulties you are now facing. Other expenses may have caught you off guard too, such as a theft, an accident or a natural disaster not covered by your insurance.

Using or misusing credit gets many people into trouble. You may have over-extended yourself without realizing until it was too late if you frequently relied on the following for your spending:

  • Credit cards
  • Installment loans
  • Payday loans
  • Debt consolidation

If you had a recent life change, like a divorce or job loss, you may be having a difficult time adjusting to the drastic and devastating financial changes. Recovery from these events may take years, and creditors are not always willing to wait.

The first steps to regaining peace of mind

While pinpointing the reason for your financial woes may not bring about a solution, it can help you to avoid the same pitfalls in the future. Meanwhile, getting out from under the burden of debt may be your one and only goal. You may never have imagined yourself considering bankruptcy, but if it has crossed your mind lately, it may be worth investigating.

Speaking with a bankruptcy attorney can bring about immediate effects: you will know your options and you will have a better understanding of your next best step. Whether bankruptcy is right for your situation or some other course of action may be more profitable, having an attorney to protect your interests and guide you through the process will help you move in a positive direction.

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  • Santa Clara County Bar Association | 1917
  • American Inns of Court
  • CWL | California Woman Lawyers
  • Bay Area Bankruptcy | Forun
  • The State Bar of California
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