There are various reasons why people file for bankruptcy. Of course, the bottom line of them all is – debts are so high they can’t pay them anymore.
Bankruptcy doesn’t only affect rich people who flunked big in their finances or daring entrepreneurs who risked their savings and (unfortunately) lose all of them. The majority of people filing for bankruptcy are actually the common people – yes, people like you, me and most people we meet every day.
So, what are the reasons why people file for bankruptcy? Here are the common ones:
- Excessive credit card bills – they either use their credit card a lot or they have multiple credit cards (and keep on maxing them as well). There’s nothing wrong on buying things with credit. But when used excessively, that can cause a big trouble in your finances – which can ultimately lead you to a bankruptcy case.
- Budget mismanagement – some are careless when handling their money. One way of mismanaging your money is by delaying payments for bills, debts (if any) and other obligations. This in turn adds to your expenses through charges. It’s one thing to have a budget, but you must also learn how to budget properly. If you’re careless about your money, you’re sure to fall to bankruptcy in the future.
- Pay cuts or job loss – some people take their finances to the edge all the time. When an unexpected cut in their monthly/annual income – job loss, pay cuts, decreased profits – happens, the debts they acquired would suddenly take a toll against them. In some cases, this forces the person to file for bankruptcy.
- Unpaid medical bills – some people neglect their medical bills, usually out of forgetting it. In some cases, they neglect their medical bills when that should be their priority (return to #2). Just like other delayed payments, unpaid medical bills can result to added charges or even worse! And just other expenses, this can take a toll in your finances that may eventually force you to file for bankruptcy.
These are some of the reasons why people file for bankruptcy. If you see that one of these is relatable to your current situation, it’s time to reassess your finances and see what you can do.
But, if bankruptcy is your final option, don’t worry because it’s not as bad as you think. Bankruptcy, in all irony, could even be your saving grace! But you should have the best bankruptcy lawyer in case you decided to file for one!