What are the Leading Causes of Bankruptcy?

Bankruptcy is the state of insolvency or financial ruin that people would have every reason to want to avoid. Declaring bankruptcy has far-reaching effects. It may succeed in giving relief to the beleaguered debtor but it will come at a price - the price of bearing an unfavorable credit record. To most affected people however, that is a much preferred option than being continually harassed by creditors.A Chapter 7 Bankruptcy Lawyer is the best person to consult about this matter.  So what brings people to bankruptcy? Here are some of the leading causes:

leading-causes-of-bankruptcy

Medical Expenses

There is good basis for the the saying that "Health is wealth". The moment it is lost and sickness comes in, people can be sent spiraling down in terms of finances. If it is expensive to live, living in sickness is far more expensive. Serious sicknesses will prevent afflicted people from working and therefore from earning. Sickness can also drain funds very fast since money tends to be spent faster than earned. The cure or the required procedure to get well can be very costly for life-threatening diseases.

Unemployment

The loss of a job, especially if not anticipated or expected, can be fatal to the financial condition of many. This is especially so if there are loans being paid or the unemployed is the sole breadwinner in the household. Bankruptcy will likely occur if another work cannot be found soon enough to save families from going through it.

Uncontrolled Spending

When expenses exceed income, financial difficulty is always a near possibility. Bank loans, credit card payables, and mortgage payments when added together with the cost of daily living is very expensive. Uncontrolled spending is usually the main culprit here.

Status Change

A good number of people can be forced into bankruptcy by a change in status. Women who have chosen to be stay-at- home moms  and have no paying careers to speak of may find it difficult to get by after divorce. They will need to find a paying job and that is always not easy.  Alimony can also be  a serious financial burden to carry.

Unexpected Disasters

When disasters like earthquake, fire, or severe flooding occurs, it is always possible  that bankruptcy is looming ahead. This type of occurrences typically force people to be in a serious bind. It is bad enough to face expected disasters if we are unable to avert it. So much so if disasters strike unexpectedly and during already difficult times.

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