Here’s why people actually declare bankruptcy

April 12, 2022

Many people don’t know why others declare bankruptcy. They understand that the individual has too much debt to pay off and needs to have it eliminated or reorganized. But they don’t understand how that person got to that point.

This is usually exemplified as a form of criticism. People will say that the person declaring bankruptcy should have just paid better attention to how much they were putting on their credit cards or should have tried to reduce their spending to fit their means.

But all of this misses the mark when looking at why people actually declare bankruptcy.

Medical debt

At the top of the list is medical debt. It is noted in roughly 66% of bankruptcy cases. This doesn’t always mean that it is the exclusive reason for the bankruptcy, but it’s a major part. Someone could have $200,000 of medical debt and $5,000 on a credit card. Both contribute to the fact that they can’t pay off that debt, but it’s very clear that medical debt is the main driver of this action.

Why is this such a problem?

There are a few reasons why medical debt is such a big problem in the United States. Some people don’t have insurance, for instance. Even those who do may find that their insurance doesn’t actually cover what they need to pay for. When this happens, medical care is often incredibly expensive, and it’s outside of the realm of possibility for people to just pay this out of their savings.

Another issue here is that medical debt is not really something that anyone chooses, so it’s impossible to plan ahead. If a health problem just suddenly develops or a serious diagnosis is made, people have to decide how to address it right at that moment. If given the choice between taking on debt to treat the problem and doing nothing, many people will simply take on the debt and decide to try to figure it out later. It’s not as if they’re choosing this in the same way that they would be with a home loan or an auto loan.

What can you do?

If you are facing overwhelming medical debt or any other type of debt that has you considering bankruptcy, take the time to look into all of your legal options.

By Aj rlbllp.com January 28, 2026
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