There are many misconceptions as to why people in a place like NYC file for bankruptcy. A common misconception is that those who end up in bankruptcy are irresponsible with money. However, usually the opposite is true and bankruptcy becomes necessary because of the occurrence of an event which the debtor had no control over, such as the loss of a job, an injury or a medical crisis. Everyone knows that NYC has not been insulated from the economic troubles that have affected the nation. Especially in a working class area like Queens, people often struggle to get by and one tragedy can push them right over the edge. While bad planning can also lead to bankruptcy, it is often situations over which people have little control that cause them to file for bankruptcy.
Companies Just Don’t Care As Much As They Used To…
It used to be in our society that a company felt a bond with its employees, knowing that they were the source of their success. When business would be in a downturn, companies would strive to keep their employees on the payroll, knowing that to be able to take advantage of the coming economic rebound they would need the loyal, well-trained staff that already worked there. Nowadays, however, when times are rough, companies “downsize” as much as they can, knowing that this will increase their bottom line and make them more attractive to Wall Street, and their loyal employees are cast adrift.
Take a look at the NYC Job Loss Meter, published by Crains. As the data shows, even with rumors of a recovery, there are hard working people being laid off every day is this city.
Unemployment Doesn’t Make Up For lost Salary
When someone loses a job, unemployment can help, but it cannot make up for the lost salary. And, of course, the employee loses many benefits that might have gone with the job. People, especially ones who have worked for years, think they will find a new job right away, and see their credit cards as a bridge to the time they will be working again. When the new job does not materialize, and their credit card balances cannot be maintained, they will consider bankruptcy.
Medical Bills Are Also a Leading Cause of Bankruptcy in NYC
A medical crisis that leads to a loss of income produces the same result, even when later the income is restored. It is not just the credit cards that go unpaid during the illness, but also the hospital bills that are not paid by insurance. One visit to an emergency room alone can costs thousands of dollars.
When someone is injured on the job, they will usually receive workers compensation, but that, like unemployment insurance, will not equal what they could have earned had they continued to work. However, in this case, usually the medical bills are paid through the workers compensation system.
Sometimes It’s Just Debts That Have Spiraled Out of Control
One other reason people file for bankruptcy is that their debts get too overwhelming to pay. People often go for a long time paying outsize debts and one day realize they will never be able to pay them. Large debts can accrue little by little over time until they are too much to handle, or they can arise from starting a business that does not make it. And, there are often family crises where credit cards are used, such as funerals and arrests.
Whatever the cause, the filing of a bankruptcy case can bring relief from debts that are overwhelming, and can give you a new start.
Allan Bloomfield practices bankruptcy law in Forest Hills, Queens. Contact Allan today for a free consultation.