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If you have filed for bankruptcy or would have to, how would you feel about yourself? Let's assume that it was through no fault of your own - medical debt, a job loss you had no control over, etc. Would you feel less of a person for it? An obligation to try to pay some back? Or would you just walk away and start over?
I cannot fathom a scenario where I would avoid eliminating the debts I created and agreed to repay.
There is a world of difference between just going wide open on the credit cards and someone who is filing a bankruptcy for medical reasons and cannot work again.
There is a world of difference between just going wide open on the credit cards and someone who is filing a bankruptcy for medical reasons and cannot work again.
Ummm... yeah. I did not say otherwise.
Why are you thinking I don't know that?
There is a world of difference between just going wide open on the credit cards and someone who is filing a bankruptcy for medical reasons and cannot work again.
There is and there isn't.
I have medical insurance and private disability insurance. There are ways to protect yourself from bankruptcy from medical bills and disability. Most people just choose not to since they'd rather spend the money on designer jeans, eating out, going to concerts, having a larger house, driving a fancier car, or whatever they choose to spend their money on. It's more about the degree than anything else. It's less responsible to run up the credit cards, but it's also irresponsible to not have adequate insurance. It's pretty irresponsible to not ensure your financial well-being because you'd rather drive a nicer car, wear more expensive clothes, and be seen at trendy restaurants, especially if you have dependents.
I have medical insurance and private disability insurance. There are ways to protect yourself from bankruptcy from medical bills and disability. Most people just choose not to since they'd rather spend the money on designer jeans, eating out, going to concerts, having a larger house, driving a fancier car, or whatever they choose to spend their money on. It's more about the degree than anything else. It's less responsible to run up the credit cards, but it's also irresponsible to not have adequate insurance. It's pretty irresponsible to not ensure your financial well-being because you'd rather drive a nicer car, wear more expensive clothes, and be seen at trendy restaurants, especially if you have dependents.
You cannot insure against everything; I will give four examples of six-figure catastrophes that can bankrupt even a financially responsible middle-class family.
1. Acute necrotizing periodontitis. Ordinary health insurance doesn't cover it, and dental insurance caps out at $1,000 or $2,000.
The cost of a full mouth of dental implants can be as high as $100,000. And this doesn't include lost income from surgery or rehabilitation.
2. A special-needs child. Many middle-class families are bankrupted due to a combination of expenses not covered by regular medical insurance, and having to take care (either hiring someone to do it or giving up income to do it yourself). SSDI checks are very meager and Medicaid forces you to deplete your assets before it kicks in. Full time care may cost more than $60,000 per year, which over the course of a decade would amount to $600,000. Once you have no emergency fund left, you are one job loss away from bankruptcy and homelessness.
3. The uninsured loss or massive depreciation of a mortgaged property. Homeowner's insurance coverage typically has some really nasty exclusions such as floods or earthquake losses. This can result in having a large mortgage without the house - so you either have to pay two mortgages or pay both a mortgage and rent. A similar situation can happen with eminent domain on a deeply underwater property, or other forced sales such as a condo complex which will be demolished.
He's now $110,000 in mortgage debt and still has to pay rent to live there!
4. Frivolous lawsuits and extended divorce fights resulting in unfair claims. High alimony or child support makes it impossible to re-save an emergency fund after legal fees deplete pre-existing savings. Lost income resulting from court time during work hours can easily push one over the edge.
I would feel really awful if my life was so bad that my only option was to file bankruptcy.
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