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Many people fall on hard times at some point in their
lives. Unfortunate events lead to an exhaustive struggle to stay
afloat with finances intact. Some consumers become submerged, drowning
in debts that leave them filing for bankruptcy.
"The main three reasons for filing are job loss,
medical and family breakup," says Elizabeth Warren, Harvard
Law School professor. "These three reasons account for about
90 percent of all filings, with many debtors hit by two or even
all three events."
Job loss accounts for two-thirds of the household
bankruptcy filings, medical issues cause one-half and family breakups
are the reasons behind one-fifth of household filings.
Edward Charlesworth, psychologist and author of "Stress
Management: A Comprehensive Guide to Wellness," says health-care
costs cause people to get buried in medical expenses. "We're
not talking about just diseases like cancer, but with a serious
flu, and needing hospitalization and necessary treatment."
He says those who become bankrupt are usually not to blame. "They've
been hit by a bankruptcy that was out of their control."
Attorney Gary McKenzie of Steffes, Vingiello &
McKenzie LLC in Baton Rouge, La., agrees.
He says debtors are almost always in a very low emotional
state when they decide to file. "The vast majority of debtors
are honest people who view their financial situation as a personal
failure, even if their situation resulted from circumstances wholly
outside of their control. This perceived defeat is, as often as
not, emotionally devastating."
The Louisiana bankruptcy attorney says when Hurricane
Katrina plowed through the state, victims were shocked by their
circumstances.
"These are often people who had decent jobs and
homes whose world has been turned upside down. They may not now
have a job. The home has been destroyed. The home's insurer is resisting
coverage obligations or is simply not responding in a timely way.
The list of problems, large and small, is endless. It is heartbreaking."
Charlesworth says that the emotional strain of a job
loss can be even more significant depending on age and experience.
"The reality is that lots of times people in
their 40s and 50s may end up never regaining that wage and capacity.
For the average worker out there it's very devastating."
However, he agrees that some consumers simply have a true addiction
to spending and this addiction may coincide with their emotional
state. "There are a lot of people who do things when they
feel bad, they feel depressed. They tend to go spend money."
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