Bankruptcy affects hundreds of thousands of people every year. Lots of factors contribute to your risk, including your income and where you live. Mississippi, Alabama, Tennessee, and Georgia, topped the charts in recent years for the most personal bankruptcy cases.
These southern states share another unfortunate characteristic that you should be aware of. That characteristic is a low average income. Mississippi and Alabama are both at the top of the list when it comes to poverty. Both states have an average income of less than $50,000 with Mississippi coming in lowest at about $43,000.
Living in one of these states can put you at a higher risk for bankruptcy. So what are the other risks and what can you do about them?
Factors That Put You At Risk For Bankruptcy
As we’ve discussed, bankruptcy in the southern states like Mississippi is way more prominent, mostly due to poverty. Be sure to check out where your state stands.
A second factor that puts you at risk is having multiple debts that you can’t pay the minimum on. If you’ve reached the point where you’re on the receiving end of phone harassment from your creditors, it can indicate major risk. At a certain point, you can be sued and have no choice but to file for bankruptcy.
A third factor is if you’re struggling to pay for necessities because of the money that you owe. You may find yourself charging necessities like food and electric bills, which only add to your overall debt.
A fourth factor is if you currently have a loan. A student loan, home loan, or other major loans can easily become too much to handle. It only takes one missed payment to begin a debt cycle that lands you in court. Some debt, including student debt, can be particularly hard to clear, even in bankruptcy.
Factor five is your health and access to healthcare. In states like Mississippi, which ranks 50th in nationwide healthcare, debt resulting from illness and injury is more common. This is because the low average income in that state doesn’t allow people to have proper check-ups or purchase good insurance.
If you’re currently in the process of filing for bankruptcy in the south because of your medical debt, hire a local MS attorney to help you. They can ensure that your debts are discharged, allowing you to focus on your health and recovery.
While these aren’t all the factors that can indicate risk, they are some of the most common. So what can you do to protect yourself? Well, there are quite a few ways to do so.
How To Protect Yourself
There are ways to protect yourself from the risks mentioned above. If you live in a state with a high rate of poverty, like Mississippi, you may want to consider moving to find better job opportunities. If that’s not an option, look into industries that excel in your state and see what you can do to join that workforce.
Securing a higher income is the main way to prevent bankruptcy in the south because it allows you to begin paying off debt. Speaking of debt, the next step in protecting yourself is doing what you can to minimize it. You can begin to do this by paying off your lowest debt first, and working your way toward the most expensive so you can pay off the most creditors.
Another way to protect yourself is to invest in some form of health insurance. Even a plan that doesn’t cover everything, can help you somewhat in the event of an emergency. In addition to this, you should start a medical emergency fund. Even just a few dollars a week can help buy you time if something happens.
Last but not least, avoid loans whenever possible. No loan company is on your side because they make more money off of you the longer you’re in debt. If you must take out a loan, look for the lowest interest rate possible and begin paying it back quickly.
Most people are at risk for bankruptcy in the southern states at some point in their lives, whether or not they realize it. Now that you know more, you can identify risks in your own life and prevent them from leading to trouble later on.