Accidents happen and life can be very unexpected. Without a little cash saved away for a rainy day, you may discover that you will pile up debt when an unplanned cost comes along. For example, there are times that a family member may be seriously injured and need expensive medical treatment for recovery. As well, there are times that the main breadwinner in a family may lose his or her job unexpectedly, leaving the family without a stable source of income. Whenever accidents like this happen, you want to be sure that you have a backup reservoir of cash that you can use to pay off day to day costs. According to BankRate, financial experts unanimously agree that every person should have an emergency fund.

Statistics show that most bankruptcies are due to medical expenses. 62% of all personal bankruptcies happen because a person did not have enough money to cover the costs of medical treatment and therefore had to go into debt to get the treatments needed for survival. Interestingly enough, 78% of these bankruptcy filers had some form of health insurance, but were bankrupt due to the copays and other non-covered expenses of the medical procedures. Oftentimes a rare disease or a serious injury can result in hundreds of thousands of dollars in medical bills. The average individual does not have the money to pay for these things, meaning that they will dip into savings accounts, retirement accounts, college educations funds, and any other stashes of money that they have. Once those resources are exhausted, many individuals believe that the only way to get rid of the expenses is to have them discharged in a bankruptcy filing.

The second most common reason for bankruptcy is because of job loss. This also qualifies as an unexpected emergency. When a person does not have money saved up for a situation like this, it is easy to watch the finances dwindle until there is nothing left without an emergency fund. Yahoo! Finance says that the results of a job loss can be devastating. Other common reasons for bankruptcy are divorce or separation, and unexpected expenses, but costs that could be covered by a well-structured emergency fund.

You may be curious as to how much you should save in your emergency fund. In the past, financial experts always recommended saving between three to six months’ worth of expenses. A lot of experts now recommend that you keep up to nine months or even one-years’ worth of income in an emergency account in case of job loss. The National Foundation for Credit Counseling supports this measure, and says that this is now the average amount of time that it takes of people to find a job. Thankfully, many Americans have realized the necessity of an emergency savings account, and now 54% of all income earning Americans have more money in emergency savings than they do in credit card debt. One in every four Americans has more credit card debt than emergency savings, which sadly a small raise in the statistics from last year.

When you plan your savings account, the best thing you can do is avoid underestimating. It is common to underestimate your expenses, but instead you need to remember that you emergency savings account could be the account from which you will need to cover all expenses including food, clothing, and essentials. Families with children should heighten the amount in their emergency fund depending on how many children that they have. You will want to factor in your living expenses, the amount of incomes in your household, and whether or not you have income from other sources such as investments as you build your fund. As well, you are going to want to keep your cash in several accounts. According to one financial expert, this will help you to avoid depleting your entire account when you could have spread the money over accounts for a variety of different costs.

If you want more information about emergency funds, or if you are in dire need of a bankruptcy and have exhausted all other financial means, then you are going to want the assistance of a bankruptcy attorney. You should never attempt ot file without a legal representative there to guide you. You will want to determine whether a Chapter 13 bankruptcy or a Chapter 7 bankruptcy would be more beneficial to your specific circumstances, and you will also need to discuss what items you will want exempt from liquidation should you take the Chapter 7 bankruptcy route. Talk to a lawyer today for more information!