Many of us have struggled with our finances from time to time. We allow ourselves to become indebted to avoid going broke, but that doesn’t work out for everyone. Sometimes the burden of debt gets too heavy to carry around and there’s so simple solution. People become bankrupt because of irresponsible financial decisions, wrong investments, life changing accidents, natural disasters, or just bad luck. Bankruptcy filings in the U.S in 2019 totaled 773,361 and the figures are expected to rise substantially by the end of 2020. The coronavirus pandemic forced many major businesses to shut down this year and millions of people were left unemployed; as a result, bankruptcy filings went off the charts. Bankruptcy lawyer enlists 5 common situations that lead to bankruptcy:
A Failed Business Venture
Setting up and running a business is no piece of cake. An entrepreneur has to take risks and consider several liabilities. More than often, the cost to keep a company standing exceeds the business returns. Many startups fail to survive the first year of their existence. Managing operations, retaining quality, fulfilling legal requirements, and making the endeavor profitable requires a lot of skill, patience, and financial security. Sometimes, a single lawsuit or one perilous partnership is all it takes to bite the dust.
Job Loss/Unemployment
Everyone hopes for a job that offers a handsome salary and provides long-term financial security. You might be blessed with employment that takes care of a luxurious lifestyle, but you can never be sure how long it will last. Many people do not think about a compromised future, so they never save up for a rainy day. Losing a job means that they will quickly become penniless, unless they find a replacement soon. Recession, a global pandemic, unruly political conditions, or criminal charges are a few reasons why a person may end up without work for quite a while.
Unanticipated Medical Bills
An unexpected accident or illness can easily disrupt your budget, especially if you do not possess sufficient insurance. Prolonged healthcare is expensive, despite insurance premiums, deductibles, and co-pays. Many retired citizens are living on meager pensions and/or social security that are nowhere near enough to cover basic living expenses and medical treatments. Chapter 7 bankruptcy can discharge outstanding hospitals bills, as they fall under unsecured debt.
Divorce
Individuals who were completely or largely dependent on their spouse’s income have to face intense financial hardships post-divorce. Managing a separate household and children on their own is stressful and challenging. Legal fees in a divorce rapidly empty pockets and division of assets tend to cause insolvency. Alimony and child support further diminish a person’s ability to maintain an extravagant standard of living.
Bad Credit Management
Credit cards are the unnecessary evil of this era. The key is to use them for emergencies, rather than frivolous spending. Many credit card owners forget that they have to return the borrowed money with interest. Excessive use of credit results in exponential accumulation of debt. Between mortgage payments, leases, utility bills, and other personal expenses, it becomes impossible to even pay the minimum installments. Filing bankruptcy certainly can discharge all your pending loan payments, but it also takes away your credit privileges for a long time.
Author Bio:
John Adams writes about Web Development & Design Services. He encourages his readers to improve their quality of life by incorporating positive and good things. As he loves to share his insight about life experiences, he has contribute on various online platform in the same niche.
