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Common disasters cause good people to need bankruptcy relief

One of the harshest urban legends about bankruptcy is the perception that those who file are trying to "game" the system or acting in bad faith to wiggle out of their obligations. Nothing could be further from the truth. Those who file bankruptcy here in Arkansas, and elsewhere for that matter, are almost always industrious, sincere, hard-working people, with a long history of working and paying on time.

The vast majority were considered excellent credit risks in prior years. Uncontrollable events usually intrude to create a steep financial decline. That downward spiral often leads to a point where the individual needs to ask for help.

Accordingly, a bankruptcy filer should try to hold onto his or her prior self-confidence and decisiveness that that ruled when times were better. These were not the person's fault but they were the things that happen in life that we often simply cannot control. One of the common financial disasters is a sudden serious illness, and associated medical expenses.

Medical bills are fast becoming the main cause of consumer bankruptcies. Amazingly, most who filed to eliminate huge medical bills actually had insurance but the company would not pay, according to a Harvard University study. Thus, it's untrue that only the poor or uninsured seek to eliminate their medical bills through federal law.

Job loss and income reduction are big factors in causing a family to be unable to survive in times of economic upheaval. When a company downsizes or just cuts costs,  people lose their jobs and others get less hours and less overtime. When a budget is hit by a significant loss of income, it may not be able to recover.

Divorce, excessive inflation, large student loans, vehicular accidents, runaway utility bills, unexpected emergencies, floods, hurricanes, and numerous other uncontrollable causes can ignite the need for federal help through bankruptcy. Those who file usually proceed reluctantly due to their pride in their good prior record. Residents of Arkansas who have suffered reversals by unavoidable occurrences are entitled to get a fresh start through the deep and effective provisions of federal bankruptcy relief.

Source: The Huffington Post, "Top 10 Reasons People Go Bankrupt", March 24, 2015

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