Smart Ideas: Experts Revisited

Major Reasons Why People Might Go Bankrupt The term bankruptcy is not new, actually it is something people hear about multiple times. However, many people do not actually understand the process of bankruptcy. Some do not understand the concept of what happens in a bankruptcy court of law. In essence bankruptcy is where individuals or businesses are given the opportunity to pay the debts they owe under protection of bankruptcy court. Filing for bankruptcy will always mean that one’s finance are open to scrutiny. People may do this for a number of reasons; some even say that bankruptcy can help prevent foreclosure. Some of the reasons why people may go bankrupt are discussed below. Divorce Divorce does not always end well for either parties. Divorces and separations can be quite costly. This generally results in on side of the parties losing a considerable amount of assets. In some cases it may also mean that one has to share the debt of the other individual if they had an account that was joint.
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Loss of Job
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Job losses tend to quickly result to an extreme reduction in one’s savings and assets. Your financial situation may become overwhelmed because of additional expenses. It is even worse if you have no assurance that you may get a job or venture to restore your previous financial position. Expenses of Health Research has shown that close to 62% of the bankruptcies that occur are because of medical expenses. Interestingly, the myth that says that an insured people are the ones who face financial catastrophes is very wrong. Another study done by Harvard shows that close to three quarters of those that filed for bankruptcy had some kind of health insurance. Credit Expenses This form of debt can be brought about by a continuous pile up of problems. These problems may range from illness and disability, emergency expenses or abrupt income reduction. Those individuals who struggle with irresponsible spending and poor budgeting may find themselves experiencing credit debt. Educational Loans Paying for school is probably one of the most expensive things one can do. Statistics clearly show that student loans contribute to at least one percent of bankruptcy situations in the United States. In a year this is approximately 15,000 cases. Reduced or Little Income Sometimes when employees experience a budget cut or a reduction of salaries they may get affected in different ways. Whenever companies decide on cutting down their expenses, employees may end up suffering in terms of reduced bonuses, and pay cuts. This can bring about a huge financial strain for those employees working on other businesses and have families to take care of. This may end up becoming bankruptcy. Unexpected Expenses If you are not insured you may end up spending a lot of money if you experience any unexpected catastrophe. This may include things such as earthquakes, floods, and tornadoes, which may lead to the loss of a lot of property.