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Old 10-06-2007, 04:44 PM   #21
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Originally Posted by novaman View Post
When I'm wrong I'm wrong. I just looked it up. Based on a 2005 Harvard study, it looks like 50% of bunkruptcies in US are due to illness/catastrophic medical bills.
There are some problems with the Harvard study. Nevertheless, a good portion of bankruptcies are due medical bills, at least in part. Other factors based on my observation, I am not going to dig for stats:

--Divorce. People manage to keep things barely together when married, but it all falls apart when divorce hits the picture. Two households are more expensive than one.

--Job loss. People get fired or laid off and can't pay their bills.

--Medical issues. Uninsured medical bills and/or illness which disrupts the ability to work.

--Business gone bad. And the debtor guaranteed the businesses debts.

-- No good sense. Too many credit cards, too many gifts, cosigning kids loans, too many toys with payments.

Often it doesn't take much of a big bill for people's financial lives to fall apart. It is not unusual for people to file bankruptcy owing only $10-20,000. They file because their wages are garnished.


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Old 10-06-2007, 04:52 PM   #22
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Originally Posted by Gumby View Post
.... the truth is that the three largest causes of consumer bankruptcies are actually the loss of a job, big medical bills, and/or divorce....
Even people who are normally fiscally responsible fall into this problem when they could have avoided it. My brother got laid off twice in the 90's and had to move to London to find work. He was married with 3 children and could only afford to live way outside of London to buy a house he could afford (in Grantham, Lincs). A year later he actually got head-hunted by a company in Australia (he had put his resume out everywhere a year earlier while trying to find work). They emigrated to Australia and a house was provided as part of the job which was just as well as his own house had already lost value and he had negative equity. However, his new job was well paid plus he got renters in so was able to continue with the mortgage. In the same situation, I would then have been putting extra cash into paying off the mortgage principal, but he was comfortable enough and felt secure so he never did, expecting that eventually house prices would come back - they always do - right?, especially in Lincolnshire - right?

After 6 years he and his wife got laid off from their jobs at the same time in Australia and with that he lost his Australian house which was part of the job, so he then had to find somewhere to rent, plus he was now really struggling with his mortgage payments in England, he had no job, cash reserves only for 3 months and on top of it all the Australian dollar was very weak against the pound. If we hadn't stepped in to lend him the money to get the house sold in England he would have been in deep do-do. They both got jobs within 3 months and paid us back within a couple of years, but since then I have always reserved judgement on peoples' financial messes. Sure, plenty are fiscally irresponsible and spend like crazy, but many just don't plan for disasters like double job losses, divorce, health issues and the like.

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