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Bankruptcy: getting to the bottom of it all

On Behalf of | Jul 30, 2020 | Chapter 7

Bankruptcy is a beneficial solution to many people in Tennessee who seek immediate relief from overwhelming debt. However, if those people neglect to analyze their situation and implement changes to their financial habits, they may find themselves in a similar predicament down the road.

As soon as people recognize the need to file for bankruptcy, they should proactively investigate their situation to identify places where they can improve. Strategic and consistent changes may enable them to not only avoid having to file for bankruptcy again but effectively aid in their effort to rebuild their credit and financial foundation.

Causes of bankruptcy

According to the Business Insider, the American Journal of Public Health conducted an interesting study to analyze common reasons why people resort to bankruptcy. The results concluded that of everyone who participated in the study, an impressive 66 percent of bankruptcies were due to unexpected medical bills. Other reasons people file includes the following:

  • Living outside of one’s means
  • Student loans
  • Unaffordable mortgages
  • Divorce

Identifying personal reasons

In an article by U.S. News about recovering financially from bankruptcy, one of the top recommendations is for people to identify how they got to the point they did. Was it because of an unforeseen, unfortunate circumstance outside of their control such as job loss or a severe accident? Is it because they lived above their means and spent money they did not have?

People who proactively identify the cause of their bankruptcy may in turn recognize what to do differently in the future to avoid similar problems. They may also choose to rely on the help and guidance of professionals to aid in their effort to establish new, healthier and affordable financial goals.