1. Unemployment. When people are unemployed, it can be extremely difficult for them to make ends meet with just their unemployment checks. Often times, people who are unemployed report that they are accumulating more debt and can leave them feeling financially constrained.
2. Income is less than debt. People who choose to file for Chapter 7 may have more debt than income. For example, their mortgage and car loans may exceed the amount of money they make each year and push them toward filing for consumer bankruptcy.
3. No other alternatives. Yes, there are alternatives to bankruptcy, such as debt settlement. However, alternatives may not be right for everyone. When this is the case, people may choose to file for Chapter 7.