Bad Debtors

Posted on December 13, 2011 by Admin
Bad Debtors

Bad Debtors

Children do not hope to file bankruptcy someday. Nevertheless, the reasons that adults file are predictable. The top-three leading causes of multiple filings do not involve credit abuse or bad faith. In most situations, when good people experience extreme financial difficulty, the most practical option may be to file for Chapter 7 a second time. The U.S. Code establishes restrictions that regulate the frequency of repeat filings regardless of the reasons people seek additional relief through the courts.

Reasons Why People File for Chapter 7 a Second Time

According to a joint research project conducted by two major credit card companies, fewer than 5% of all Chapter 7 and Chapter 13 cases result from intentional credit card abuse. The results of the project remained confidential until after the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. This landmark legislation included additional U.S. Code restrictions that apply to anyone who wants to file for Chapter 7 a second time.

Uncovered medical expenses cause approximately 50% of all bankruptcies. Few people have the financial ability to pay for hospitalization and subsequent recoveries without medical insurance. As a result, catastrophic injuries and illnesses bankrupt patients with alarming regularity and may force a patient to file for Chapter 7 a second time. This cycle is self-perpetuating because of the responsibility of state and county hospitals to provide emergency care without regard for a patient’s payment ability.