Bankruptcy Is On The Rise And It May Not Be Our Fault

If you’re thinking of filing bankruptcy, you aren’t alone. Along with several banks, automotive companies, other businesses, filing is on the rise and doesn’t show any sign of slowing down. People have dug themselves in too deep, combined with a sluggish economy, low wages, and few jobs--there simply isn’t enough money to go around anymore. Unfortunately, unlike what the media would have you believe, most cases of bankruptcy that are filed by individuals in the United States are not due to irresponsible spending habits, but due to over inflated medical bills, unfair bank practices, and rising student loans. It isn’t fancy new cars or designer handbags that have put many Americans in crisis, but rather our health, lack of benefits, and unscrupulous creditors.

Without medical insurance, a trip to the emergency room can cost hundreds, if not up to thousands if x-rays or tests are required, and that’s not to mention if surgery or other treatments are necessary. There are people with well over six figures of medical bills on lower-middle class salaries with zero benefits. People must make choices to either default on the bills or pay them off while compiling debt elsewhere. In several cases, bills can continue to pile as the need for treatment does as well. Trying to procure reasonable insurance following a major accident or health issue is very difficult and costly. Bankruptcy is a way to relieve the stress and pressure that these bills can put on a family.

Another reason why bankruptcy is suddenly on the rise is the recent housing crisis in the United States. Several banks loaned to individuals without verifying income and savings, but rather trusting whatever was written on their loan applications. The results was that some well-meaning, but misguided people purchased homes without the necessary funds to back it up, often thinking that they’d be able to sell it for a greater turnaround. When the market crashed, mortgages shot up, and no one wanted to buy anymore, leaving many with a heavy burden. Similarly, many people received down payments for homes through government-assisted programs, allowing them to buy property that was valued far above their income level.

Student loan debts are also on the rise and in many cases are spiraling out of control. This; however, isn’t necessarily due to a fault on the borrower’s end. Universities, including publicly funded institutions, have raised prices far above other levels of inflation. High tuition fees, greater interest rates, and an increasing number of graduates each year, has made supply far greater than demand. Many students are overqualified for the jobs they are receiving, yet are still encouraged to receive a degree at a great expense. Even if college is forgone in favor of building experience for a few years, they will still be at a disadvantage as they will be in direct competition with graduates, even though that level of skill is not necessary for the occupation in question. The result? Younger people are claiming bankruptcy due to inflated expectations on behalf of society and corporations.