Financial problems are common for all of us. Whether temporary or permanent, they can come forward without warning and are often out of our control. Who can really consider themselves safe from misfortunes and unforeseen life? In case of Bankruptcy, this is important.
We are here to discuss one of the taboos of USA: Bankruptcy. One may well wonder what causes a person to declare bankrupt. That’s a question that has innumerous different answers. However, some answers are repeated often. Here are the 10 leading causes leading to personal bankruptcy:
1. Overuse of credit:
This is not a surprise; the main cause of financial problems is a misuse of credit leading to over-indebtedness. The accumulated debts are of all kinds: credit cards, mortgages, personal loans, student loans, and others. In most cases, people get into debt and do not even realize that their situation is critical.
One day, they wake up in panic and seek solutions to their now very severe problem. If you feel that your debts become problematic, consult a trustee in bankruptcy before it is too late because it is often possible to counter the over-indebtedness. Prevention is better than cure!
2. A job loss or a decrease in salary
Losing one’s job is tragic for many people. Often they are very experienced in their field but can’t find work again. It’s a stressful and very difficult time for one’s own personal expenses and on the credit card as well. Wage reduction is also a difficult test. If you can barely make your monthly payments, even a slight drop in salary could put you in troubled waters.
3. Medical problems
Medical problems are one of the main causes leading to bankruptcy. Not only are treatments often expensive, but if your energy levels or physical condition deteriorate, you will not be as good as before at work. In addition, overindebtedness is a vicious circle because it is particularly difficult physically and psychologically. If your health is fragile, the stress of the debt could make your situation worse.
4. Separation or divorce
A difficult separation or divorce puts a lot of emotional and financial pressure. It is never easy to recover from a grief and often it is too late and you no longer have control over your finances. Especially if you have to assume alone the financial obligations that you assumed to two before.
5. Seasonal employment
A large number of people in the country have seasonal jobs and are therefore more vulnerable to economic changes in their lives. In addition, because they earn their salary over a short period of time, they must be extra careful and plan their personal finances well.
6. Non-payment of taxes
Tax debts accumulate quickly, especially if you are self-employed and have not planned to pay so much tax. It is important to set aside the amount and not to touch it. You can even take advantage of this money to grow temporarily in a guaranteed investment.
7. Financial mismanagement
Managing personal finances is not an easy task for everyone. Setting up and follow a budget religiously is crucial if you are struggling with money problems. If you spend more than you earn, you go into debt and unless this situation is only temporary, the debt problems will knock on your door sooner than you think.
8. The failure in business
Going into business is a financial risk, it’s undeniable. As much as this risk is positive, it weakens you. And unfortunately, not all business projects are turned out to be successful. There are many successful business people who have gone bankrupt one day. Not all projects succeed, even the good ones!
9. Insufficient pension
Will you save enough money to support your retirement needs? Too often people underestimate their expenses in retirement and do not save enough. It is not out of bad will, they are broken by their debts!
10. Gambling habits
Sadly, gambling problems cause financial problems sometimes very serious in excessive gamblers. We sometimes see people with hundreds of thousands of dollars of gambling-related debt simply. To add to the misfortune of these people, their dependence on gambling is also often the cause of a divorce or a job loss. Other addictions (drugs, alcohol, etc.) are often also the cause of serious debt problems.
Conclusive Lines for You:
When we are in a situation of personal bankruptcy, it is easy to let oneself be defeated and to consider one’s situation as a failure. But do not let your condition or your debts paralyze you. The most important advice for surviving debt is to consider this event as an opportunity to put your life in order and get you back on a better footing. Personal insolvency is often the result of many unfortunate actions you have taken: a risky investment, an accumulation of debt, bad buying habits, etc. For this event to serve as a stepping stone to a new start, you will need to understand what led you to go bankrupt.