Top Reasons Why People Go Bankrupt Bankruptcy is not a new term, in fact it something people hear about a lot. Nevertheless there are a number of people who do not understand the concept of bankruptcy. Some do not even get how things go down in a bankruptcy court of law. This is usually a process whereby businesses and consumers are given the opportunity if repaying all the debt they might have under protection of a bankruptcy court. Once someone files for bankruptcy, this usually opens their finances to public inspection. There are many reasons why people go bankrupt or file for bankruptcy, in fact some say that it can prevent foreclosure. Below are some reasons why people might go bankrupt. Divorce Divorce does not always end well for either parties. Going through a divorce can be quite expensive. This generally results in on side of the parties losing a considerable amount of assets. In some cases it may also mean that one has to share the debt of the other individual if they had an account that was joint.
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Loss of Job
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Losing a job is something that will obviously lead to lowered assets and depletion of savings. Your financial situation may become overwhelmed because of additional expenses. It gets worse when there is no guarantee of when you can get another job that can take you back to the previous financial position that you enjoyed. Health Expenses Research has shown that close to 62% of the bankruptcies that occur are because of medical expenses. Those that think insured people face more financial catastrophes are quite wrong. According to a study done by Harvard University nearly 72% of those that have filed for bankruptcy have health insurance. Credit Debt When problems pile up and find yourself in a situation where you are incurring a lot of expenses you may end up experiencing this form of debt. Some examples of these problems include emergency expenses, abrupt income reduction as well as illness and disability. People who struggle with poor budgeting and spending in most cases may end up experience credit debt. Student Loans Paying for school is probably one of the most expensive things one can do. Statistics done in the United States show that students loans contribute to at least one percent of bankruptcy situations. This is approximately 15,000 bankruptcies a year. Reduced Income Employees may end up getting affected by salaries going down or budget cuts. Some employees may end up getting reduced bonuses and serious pay cuts whenever companies are cutting down expenses. This can bring about a huge financial strain for those employees working on other businesses and have families to take care of. This may end up becoming bankruptcy. Unexpected Expenses One may be forced to cater for unexpected expenses especially when they occur and you have no insurance. This may include things such as earthquakes, floods, and tornadoes, which may lead to the loss of a lot of property.