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WHY PEOPLE ARE FORCED INTO BANKRUPTCY
WHY PEOPLE ARE FORCED INTO BANKRUPTCY?
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Just like many people, some may be urged to declare bankruptcy because of various life circumstances that present inevitable financial challenges that are reasonable, such as:
Medical Expenses
Healthcare: Medical debt could increase, especially if you have no insurance. In case You Encounter An Illness Or An Accident, In Most cases, your Savings Are Eaten Up, Resulting in Financial Stress.
Having No Job Or Less Income
Unemployment: Having Lost A Job An Individual’s Source Of Income Outweighs Means That One Would Not Be Able to Satisfy Their Financial Needs.
Under Employment: Many people have jobs that don’t give them enough income to live off of, or they only work a few hours a week because their position at the company doesn’t pay them enough.
Separation / Divorce
Attorney Fees and Other Income: Divorce Comes With A Cost And Reduces One’s Income, Resulting In the Accumulation Of Debt.
Debt On Credit Cards
Credit card debt items tighten the rapidly increasing interest as they require minimum payment, hence suffocating the debt holder.
Economic Factors
Recession or Economic Downturns: Job cuts have become the new normal, and recessions are synonymous with exposing deeper economic issues. Therefore, the idea of multiple bankruptcies during a recession makes sense.
Low Proficiency in economics
Financial illiteracy exposes people to a higher probability of making bad decisions, eventually leading to greater debts.
Degree Loans
Education Debt: Increasing student loan debt will be a headache for a graduate, especially if they cannot secure a good job in the relevant field.
Life Events that are not planned.
Accidents or Natural Catastrophes: Events such as a car accident or a natural disaster can cause huge expenses that are sometimes unfathomable for a person.
Shelter Default
Eviction or Foreclosure: Increased expenditure on housing facilities could lead to the foreclosure of the mortgage or eviction from the rented premises, which would bring about grave financial difficulty.
Taking on More Debt Than Necessary
Overspending: Some individuals go on to borrow more than they can afford, and as a chain reaction, this leads to excessive borrowing, which becomes unmanageable.
People who are under financial stress often declare bankruptcy as a last step. It is a reset button financially, but there are multiple reasons behind it rather than one sole reason that resulted in the situation. Knowing these reasons will assist in strategizing and preventing similar occurrences. Please let us know if you have any more questions or need more info. We’re happy to help!