You never know when you will go bankrupt. Bankruptcy can be experienced by different people including, male, females, couples, old and young. By knowing the main reasons for bankruptcy, you can prevent yourself from going through this tough experience. According to researchers, bankruptcy is caused by a variety of reasons, but the main reasons include using too many credits or loans, overspending and
losing your job. If you would like to know more, we’ve gathered some information below regarding why people
ends up in this bad situation.
Poor/Excess Use of Credit
Some people simply can’t control their spending. Credit card bills, installment debt, car and other loan payments can eventually spiral out of control, until finally the borrower is unable to make even the minimum payment on each type of debt. If the borrower cannot access funds from friends or family or otherwise obtain a debt-consolidation loan, then bankruptcy is usually the inevitable alternative.
Statistics indicate that most debt-consolidation plans fail for various reasons, and usually only delay filing for most participants. Although home-equity loans can be a good remedy for unsecured debt in some cases, once it is exhausted, irresponsible borrowers can face foreclosure on their homes if they are unable to make this payment as well … Read more at investopedia.com
1. Medical Expenses
A recent Harvard University study showed that medical expenses account for approximately 62 percent of personal bankruptcies in the US. Interestingly, the study also showed that 72 percent of those who filed for bankruptcy due to medical expenses had some type of health insurance, thus debunking the myth that only the uninsured face financial catastrophes due to medical-related expenses.
2. Reduced Income
Companies are cutting down on their expenses; and for many employees, this results in major pay cuts and reductions in bonuses. The end result to employees can include bankruptcy.
3. Job Loss
Even if there’s a substantial severance pay, job loss can quickly deplete one’s savings and assets. Plus, job loss brings extra expenses such as COBRA insurance — and there’s no guarantee as to when a new job will be forthcoming … Read more at huffingtonpost.com