Bankruptcy is legal process where you are declaring that you are unable to pay your debts. When people can’t pay their debts at that time bankruptcy is a suitable option for them. When people file for bankruptcy, bankruptcy allows them to start rebuilding their credit faster and putting them on track for a brighter financial future. According to US bankruptcy court statics every year in USA 1.5 million people file for bankruptcy. Bankruptcy is a tool to help people tide over their financial hardships and this should never be taken up as a first choice, it needs to be the last option when all the doors to pay off your debt are closed. An experienced and skilled bankruptcy lawyer Mr. Brian Linnekens shares a few reasons and situations why people go bankrupt. You need to know these reasons of bankruptcy so that you can try and steer clear of these situations and ensure that you don’t have to ever file bankruptcy. After knowing your financial problems you can easily control your debts before they take control of you.
Job Loss –
Sometimes people might lose their job and in that time frame they might not be able to pay off their debts and credit card bills which might also lead to depression which further results in the piling up of the already accumulated debts. Also decreasing salary is a big factor in increasing financial hardships. The end result is that more and more people are applying for bankruptcy. Unemployment is another big factor in the rising cases of bankruptcy. Watch out for any career and market changes that might affect you adversely.
Divorce is quite an emotional time for both partners. Divorce is an expensive process because of high attorney fees, court costs, child support and other hidden costs, that are hard to identify, but never fail to show up. At this time it is really important that you need to hire an experienced and skilled bankruptcy attorney who can help you manage and eliminate your debt in the most feasible way possible in case you are left with no option but to file for bankruptcy.
Unexpected Emergencies –
Emergencies can come anytime like – car accident, home expense, fire, tree falling on home. These types of unexpected expenses quickly drain the whole savings of the people and create more problems to pay other monthly important expenses, bills and loans.
Medical Expenses –
Recent studies say 62 percent of people are filing bankruptcy due to increasing medical expenses. Sometime family members suffer from medical issues like cancer or accidents. Health insurance plans do not cover the entire cost since the treatment time may prolong based on the gravity of the problem. Thus medical expenses shoot up and then some people can’t pay the already existing debts along with the already accumulated medical expenses. Better keep an emergency fund handy which can be used in times of medical emergencies. You can also look out of an insurance plan that covers the whole family for a sustainable and large amount of cover.
Poor or non-existent Financial Planning –
If your financial planning fails then you have to face numerous financial problems. Managing money is really hard, if you don’t pay your loan installment and bills on time then creditors will start hounding you with phone calls, messages and mails. To stop creditor harassment you need to file bankruptcy. Better have robust financial plans in place and make sure to have a plan B is the main plan fails to avoid filing bankruptcy.
Student Loan –
Most students are unable to pay their loans timely. Whatever loan type if you do not pay loan installments on time then it will become a problem for you. To avoid creditor harassment, students generally file for bankruptcy.
Avoiding Foreclosure on their homes-
In America 1% people file for bankruptcy in order to avoid foreclosure on their homes. And some people try to cut down and reorganize debt by filing for bankruptcy.