Most people never care about becoming bankrupt because they don’t think they can get into such kind of situation. It is true that most Americans are finding themselves in this kind of situation where they cannot pay their debts. This has made more and more individuals who cannot pay for their debts to turn to bankruptcy as their only option.
The many causes of bankruptcy are unforeseen thus it is imperative that you understand the common factors that result in bankruptcy and will help you reduce any risk of becoming bankrupt. Here are some common factors that cause bankruptcy.
Medical expenses
Medical expenses have proved to be among the common causes of bankruptcy in America as the health insurance coverage has many holes. People who are seriously injured or ill tend to quit their jobs and cater to their health and this would mean giving up their medical insurances.
There is also a chance that you will use your own savings to cater for the medical bills not covered by the insurance. This may drain your savings and be unable to pay for the expensive medical bills. Due to this situation, you may seek to file for bankruptcy to avoid these expensive medical bills.
Job loss
Job loss is another common cause of bankruptcy. Our economy has not been stable over the years and we are having more and more people being laid off or fired from their workplaces. After being laid off, it is not that easy to find a new job thus you will be forced to dig into your savings to cater for their bills. It is no surprise that without a source of income you will be unable to pay the bills and if the situation persists for long you may be faced with serious debt thus resulting in filing for bankruptcy.
Divorce
This is a very delicate situation as it requires that you should be prepared for anything that comes after a divorce. It is indeed separation that causes bankruptcy. In a situation n where you have pay for child support or alimony without proper preparation, you may face serious debt.
Accumulation of Debts
You may also file for bankruptcy due to the accumulation of a lot of debts that you are unable to pay on the contracted period. Debt comes about if you fail to manage your spending properly. These debts may result from lack of paying the mortgage, installment debt, credit card bills and car payments. If you have a lot of unsecured debt or credit card debt you can opt to file for chapter 7 bankruptcy so that it can be discharged.
In any event that you accumulate so many debts, you may opt to file a bankruptcy so that you can be given more time to pay the debt depending on the repayment plan.…