There are many reasons that folks in the Sacramento area file for bankruptcy protection. From divorce to medical expenses, tough (but common) life events are often the primary cause of bankruptcy. It is important to realize that these problems happen to many, many people. While feelings of shame are valid and come from a place of personal responsibility, it is crucial that proactive steps be taken and experience counsel sought in order to survive tragic life events intact.

Lack of Employment – Thousands of consumers in the Sacramento area are unemployed, which also likely means that they are having trouble making payments to credit cards or maintaining insurance. This can lead to debt collection problems and medical debt.

Medical Expenses – Studies have recently shown that 42 percent of all personal bankruptcies result from medical expenses. And just because a consumer has health insurance doesn’t mean they are immune from devastating medical debt. In fact, 78 percent of those that filed due to medical debt actually had health insurance.

Family Support Obligations – Child support, alimony, and the burden of providing for a household on a single income can result in substantial financial stress. These factors combined with a high divorce rate show that 8 percent of personal bankruptcies are caused by family support obligations. In addition, these situations may also lead to decreased earning power because of the emotional distress.

Disasters – Even those with the foresight to save an emergency fund often find themselves not fully prepared for natural disasters like floods, hurricanes, and earthquakes. Even with insurance, these events can lead to bankruptcy because can lead to loss of a consumer’s home, or even her job.

Student Loans – Student loans are fast becoming more and more burdensome as the cost of education grows and the availability of jobs continues to be stagnant. While student loans won’t be eliminated in bankruptcy like other unsecured debts, it is sometimes possible to use the bankruptcy in a greater plan to free up other money to satisfy student loans.

Uncontrolled Spending Habits – Out-of-control credit card bills, car payments, and mortgages often force consumers into bankruptcy. If a consumer is unable to make even the minimum payments, bankruptcy may be the only way out. Prior to the housing crisis, it was easier to borrow more money to deal with spending problems. But now there is less money to borrow. Even when there is credit to be had, it is likely only a temporary solution. Even those that use “solutions” like debt consolidation and home equity loans often find themselves filing bankruptcy.

The fact of the matter is that there is a common thread throughout these most common causes of bankruptcy: they all require extraordinary steps to stop the bleeding. Which is exactly what Congress intended bankruptcy to provide: a legal apparatus with extraordinary power to provide a fresh start to consumers. Bankruptcy can truly be the difference between failure and success for many folks, but the complexity of bankruptcy is certainly surmountable with the proper counsel.