There are many explanations as to why people find themselves facing bankruptcy. While some can be prevented, others may be victims to unexpected and devastating circumstances.
Here are some of the common reasons why people go bankrupt.
One. Unemployment of Loss of Income
Loss of a job can cause serious consequences for some people. While some may receive workers compensation that can help keep them afloat for a while, others may not be so lucky. They may experience difficulties in finding another job that has a similar income to their previous one, or may not be able to find a job at all. This can cause financial distress, especially as the bills pile up.
Two. Excessive use of credit
Another common reason why people go bankrupt is excessive use of credit or bad budgeting. Some people have no control over spending and may find themselves unable to borrow even the minimum payment on their credit cards. As a result of interest rates on credit cards, people may find themselves owing a lot more money than they initially thought.
If they are unable to borrow funds from another source such as family or friends to pay the borrowed money back, this can cause someone to file for bankruptcy
Three. Unexpected illness or death in the family
People may file for bankruptcy if there is an unexpected death in the family, especially if that person was the one who brought in the most income. Alongside the emotional devastation this will cause, trying to find another source of income will cause financial distress and put one in a difficult and challenging situation.
An unexpected illness in the family can also quickly drain savings that had taken years to save, especially if medical bills begin to pile up. This is also an emotionally and financially draining position that may force someone to file for bankruptcy.
If you are having difficulties handling your debts and are considering bankruptcy, then please speak to one of our professional and friendly consultants at ABS to see how we can help you today. Call us on our toll free line – 1800 462 767 today.