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6 reasons that bankruptcy strikes

You've never had financial problems. In the 10 years since you graduated from college, you've been smart with money. You've gotten pay raises at work without massively raising your standard of living. You think you're immune to bankruptcy.

The reality is that bankruptcy often comes on unexpectedly, and it's sometimes for reasons that are out of your hands. Below are six reasons why bankruptcy can strike.

1. You lose your job or your income drops.

Maybe that dream job disappears when the company goes under. Maybe you own the company, and it tanks out in an economic downturn. Your entire budget centered around that stable income. How long could you go without it before the bank accounts would be empty and it'd be impossible to make your monthly payments?

2. Medical problems.

Medical expenses can rack up in an incredible hurry. One car accident could put you tens of thousands of dollars in debt almost overnight. Compounding the problem, medical issues often take you out of the workforce. Being diagnosed with a serious disease could ruin your earning ability as you get treatment, all while the expenses mount. Even if you've generally been healthy, you can't always predict these issues.

3. Divorce.

Splitting up with your spouse can be very expensive. Not only could you have legal fees to cover, but your assets could get divided in half. At the same time, your expenses could nearly double since you're now paying for a place to live, utilities, and everything else all on your own. To cap it off, the court may order you to pay child support or alimony.

4. Spending too much.

Yes, you've been careful up until now, but that can lull you into a false sense of security. You may slowly start buying more than you need, putting a little excess debt on your credit cards. As this becomes a habit, you could wind up creating far more debt than you realize.

5. Unplanned expenses.

Your hot water heater goes out and floods your basement. Your car breaks down and it's not under warranty. You or your spouse accidentally become pregnant. These are just a few examples, but unexpected expenses can blindside you. That nice security blanket that you had in your bank account then disappears.

6. Interest rates.

When you borrow money, you often have to pay interest rates that may be higher than you expected. Student loans, credit card debt, and mortgage payments all demand a certain amount of extra. Things that you thought were affordable can sap your extra money.

It's good that you haven't had financial problems in the past, but don't think that makes you invincible. If you run into trouble for one of the reasons listed above, make sure you know about all of the legal options that you have, including Chapter 7 and Chapter 13 bankruptcy.

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