Dispelling the Myths Surrounding Bankruptcy: Many Montanans Truly Have Nothing Left to Give.

1.5 million people in the United States filed for bankruptcy in 2010, an increase of 13.8% from 2009. Would you have guessed that 42% of all personal bankruptcies were a result of medical expenses and that 78% of the individuals who filed had health insurance? A Visual Tour of the Leading Causes of BankruptcyThere is the misconception that those that file for bankruptcy do so because they have lived outside of their means and have been careless about their spending, going on shopping sprees with credit cards and racking up large amounts of debt on frivolous items. The reality is that large amounts of medical debt and the high rate of unemployment are the major factors that lead to individuals needing to file bankruptcy.So who are these bankruptcy filers? Turns out, the largest percentage of filers are not recent college graduates who simply overextended themselves. Rather, the average filer is between the ages of 35-44. According to the Institute for Financial Literacy, over 30% of bankruptcy filers have some college education, compared to only 21% of the US general population. The majority of the filers, 45%, make less than $20,000 per year and the unemployment rate among bankruptcy filers is a whopping 3 times the national average!Those who file for bankruptcy are often accused of being lazy and not wanting to take responsibility for their debt. That they are looking for an easy way out, a fresh start. But what the statistics show is that most bankruptcy filings result from events in people’s lives beyond their control: job loss, medical bills, divorce. The inability to continue to pay directly results from these life changing situations, combined with the severe economic recession that has affected the world. You can ask any number of our clients and they will tell you that filing for bankruptcy was not their first choice; instead, it was their last desperate attempt to return a level of security back to their lives.Our clients and staff attorneys will also tell you that filing for bankruptcy is not just an “easy way out”. Bankruptcy will stay on someone’s credit report for up to 10 years. With many employers, car insurance companies, and landlords choosing to review credit reports before making hiring decisions, insuring vehicles or entering into lease agreements, filing for bankruptcy has an impact far beyond paying an additional 3% on a car loan. While bankruptcy can offer immediate relief from crushing debt and wage garnishment, it can also keep low income people in asset poverty, making the “fresh start” look more like a fresh set of challenges. The reality is that bankruptcy is full of harsh truths for those who literally have nothing left to give.