Why Do People File Bankruptcy?

“If you’re asking me who is filing bankruptcy today,  it really runs the gamut,” said Winter Park bankruptcy attorney Roddy Lanigan.

Demographically, everybody from a single mother, to the head of a large family. Professionally, it’s CEOs of large companies, school teachers and even airline pilots. The one thing they all have in common–it’s the economy.

Credit Card Debt is the No. 1 Cause of Bankruptcy

The economic downturn has spared no industry and no demographic group. People are suffering in all walks of life. The causes of bankruptcies are as equally diverse as the people that are filing bankruptcy. Generally speaking, the number one cause of bankruptcy is credit card debt.

What type of credit card debt? Credit cards are often used by people that are experiencing a crisis in their life. Whether it’s financial or personal, cards are used to supplement a loss of income somewhere else.

But people feel guilty about credit cards, they really do. And they really think that they should pay those bills. They really do. I’ve gotten somewhat immune to it because I see it all the time, but I can see when they come in that there’s a little bit of a sense of guilt with it. And um so they do feel that they should pay those cards. And then I try to explain to them that they took the creditor took risk when they issued that card to you. For whatever reason the deal didn’t work out. They understand that and they’ve calculated accordingly. That’s why you were charged such a high interest rate on the card.

So don’t feel guilty about credit card debt and discharging it. I can say that I can count on one hand the times that I’ve seen the client’s petition where they had credit card debt that is as a result of reckless credit card spending.

Credit Cards Supplant Loss of Income

It’s always unsecured debt that is used to supplant a loss of income somewhere else. The other issue’s why people would file is if we would live in a state that home values have plummetted and if they had any equity in their home they don’t now and some people will never have a chance to ever, they’ll never be able to develop equity in their home the home’s values have plummetted so much.

I know somebody who that bought a condo for $250,000 and the one next to her sold for $30,000. That’s no lie. How do you ever get out of that?