why do people file bankruptcy

People file for bankruptcy primarily because they face overwhelming debt that they cannot repay and see little hope of improving their financial situation soon. The main reasons include loss of income (such as job loss or reduced work hours), overspending or misuse of credit, medical crises leading to high medical bills, divorce causing financial strain, death of a spouse reducing household income, and addiction-related financial issues. Bankruptcy often follows a series of financial shocks where individuals exhaust all other options before resorting to it as a last resort for debt relief and a fresh financial start.