Bankruptcy affects people in Louisiana and the rest of the country. Here are some of the common contributing factors that precipitate a bankruptcy and some of the steps people can take to avoid one.

While bankruptcy can carry the negative connotation of poor money management, the Huffington Post reveals that many of the biggest reasons people file for bankruptcy are largely out of their control. In fact, the most common cause of bankruptcy is medical bills. Even when a person has health insurance coverage, medical expenses can snowball with lost wages and quickly overwhelm their family’s budget.

The second most common contributing factor is job reduction or loss. A company may reduce hours, limit overtime wages or cut costs through layoffs. These actions can be totally outside an employee’s control, but can precipitate financial disaster.

Some bankruptcies are the result of poor financial practices. Many bankruptcies result from excessive loans, credit card debt, or unaffordable mortgages.

In some cases, bankruptcy is unavoidable, but US News offers some helpful suggestions to consolidate or eliminate debt before the situation becomes dire. Debt consolidation is one option. Debt consolidation refers to the formal or informal process of contacting creditors and negotiating new terms on current loans. Faced with the alternative of having debt liquidated under bankruptcy, many creditors are willing to work to establish a more lenient payment plan that will allow them to recover more of their money. At times, debtors may need to sell off property or return recent to get above water. Above all, debtors on the brink of bankruptcy should attempt to reduce their expenses. Some sacrifice and spending constriction now could bring financial stability and peace of mind in the future.