Bankruptcy and the debtors who seek bankruptcy protection have often been the unfortunate victims of unfair labels and generalizations. One of the unfair and inaccurate labels given to debtors who file bankruptcy is "irresponsible." Many people see bankruptcy as a cop out or an easy road away from trouble and view those who use bankruptcy as "cheaters" who want to run away from their responsibilities. But that is far from the truth. Most debtors who file for bankruptcy are responsible, ordinary people who have fallen on hard times and just need a helping hand. They may have filed bankruptcy because of a job loss, medical emergency, death of the family breadwinner or some other drastic change in their life that has caused them to have too much debt they can no longer pay. Below are a couple of real life scenarios that often cause people to file bankruptcy:
- A woman loses her husband unexpectedly. He was the primary breadwinner, she worked a part-time and cared for two small children. They are 32 and 36 respectively. Maybe they have a mortgage, car note, student loans and a little credit card debt. They weren't expecting either of them to die so young. The widow cannot pay the debts left behind with only her part-time job, so she files for bankruptcy to save her home.
- A debtor has been working the same job for 4 years. He/she has a great salary, wonderful benefits and just purchased a home. All is well except that this new job is in the housing industry which as all but totally collapsed. The debtor loses his/her job and has been unemployed for one year. He/she can't pay all of the mounting debt and keep the new home. This debtor files for bankruptcy.
The above examples are more common that most critics of bankruptcy care to admit. It is for these debtors that bankruptcy exists and serves as a financial life boat.