Most Common Reasons People File

The persistent pressures that motivate a particular person to file bankruptcy can often be as complex and unique as one’s character.  However, just as you would typically find certain common traits and characteristics amongst ordinary people, there are indeed distinct and common reasons that people decide to seek debt relief.  So we wanted to find out, what are the most common reasons people file bankruptcy in San Diego? To answer this question, we conducted a survey of more than a hundred bankruptcy filers who were existing or former clients of our firm. The results are quite interesting.


We would first point out that there are many motivating factors for filing bankruptcy. Some people file because they are tired of the incessant harassing phone calls. Others feel that they are drowning in debt and just need to eliminate their debt and start with a clean slate. Frequently, members of the armed forces whose security clearance is in jeopardy due to ignoring their financial obligations need to file to demonstrate fiscal responsibility in that they are dealing with their creditors instead of running from them. Many people file because they were recently served with a lawsuit or a wage garnishment. Homeowners facing foreclosure often file to repay mortgage arrears and stop foreclosure. All of these are only motivating factors, things that created a sense of urgency to deal with the existing issue. The existing problem is something else. It is existing a type of unmanageable debt that one seeks to eliminate or repay through a federally structured repayment plan called Chapter 13. Common types of debts include credit card debt, medical bills, a stopping foreclosure (and repaying mortgage arrears), back taxes, and vehicle repossession (balance owed after repossession).


Without further ado, here are the most common reasons that people in San Diego file for bankruptcy relief:

  1. 1. Credit card debt (including lawsuits and wage garnishment)   –  67% of filers
  2. 2. Home foreclosure  (Chapter 13 to repay mortgage arrears)   –  15% of filers
  3. 3. Medical bills   –  12% of filers
  4. 4. Back taxes   –  3% of filers
  5. 5. Vehicle repossession –   3% of filers


As shown by our survey results, an astonishing 67% (two-thirds) of people file in order to eliminate credit card debt.  Many of them who are more proactive file before a lawsuit is filed against them and they are dragged into court.  But many of them fail to take action until they are served with a Summons to appear in court and answer a lawsuit, and then rush to retain an attorney to file an emergency bankruptcy case.  Still others don’t respond to a lawsuit (or don’t know they were served) and suddenly receive the unexpected and unwelcome news from their employer that their wages are going to be garnished.  They rush to file an emergency case but not before a percentage of their wages are deducted and sent to the creditor.  The 67% of filers listed in the survey results represent people who filed to wipe out credit card debt, whether before litigation is filed, after a lawsuit is filed, or after their wages are garnished.


We hope that you have found our survey useful and insightful.   If you have any questions about the survey or wish to comment on it, please contact our office and ask to speak to the managing attorney about our survey regarding the most common reasons that people file for bankruptcy in San Diego.