I have been helping consumers file either Chapter 7 or Chapter 13 bankruptcy since 2000 all over South Carolina. During this almost 20 year span, I often see the same issues or mistakes that lead to bankruptcy. Here are the top mistakes I see in no particular order:
1. No rainy day fund. People who file for Chapter 7 or Chapter 13 bankruptcy generally do not have a rainy day fund or have never had one. They live pay check to pay check. In defense of many of these people, a medical hardship has caused this to happen. However, a rainy day fund of six to none months can usually help prevent having to file for bankruptcy if a person loses a job or a medical crisis occurs. In addition, the stress relief I see with people who have rainy day funds is tremendous.
2. No medical insurance or inadequate medical insurance. This is a major reason for filing bankruptcy. To prevent this, make sure you have adequate medical coverage. If you still receive a hefty medical bill, try first to negotiate with the hospital.
3. Loss of employment or hours at work. One of the largest reasons for my clients having to file Chapter 7 or Chapter 13 bankruptcy is a cutting in hours or losing their job all together. In 2020 with COVID-19, it is happening to many people. Away to prevent having to file for bankruptcy is too make sure you have a rainy day fund.
4. No budget. Every family needs a budget. This will allow a family to gauge if they are over spending on daily consumer expenses. I recommend that all individuals and families do a budget and review the budget at least twice a month. Make sure you allocate a certain percentage to savings and your retirement account. Also I recommend that you have a certain amount allocated for emergencies. Expect for the unknow expense.
If you think you need to file bankruptcy in South Carolina, we have offices in Irmo, Columbia, Florence, and Greenville.