Bankruptcy statistics for the last decade has been worrying. Higher numbers of people are unable to pay their debt. The bankruptcy law has been amended, thus making it hard to qualify for the status.
One does not wake up one morning and declare bankrupt. There are reasons for the status. Here are five reasons to declare Bankruptcy.
- Loss of Employment
Losing a job due to resignation, layoff, or termination can contribute to loss of income significantly. Some are lucky to go off with a severance package while some end up with little or no slips, which is devastating. Trouble comes in when you lack emergency funds, and you have to use your credit cards to cater for your bills.
Statistics show that a significant percentage of people lack emergency funds to cater to a financial crisis or job loss if it occurs. Insurance coverage is also another factor that limits job seekers to their resources. In case one fails to find a similar job within a short period, they keep their creditors at bay due to the lack of income.
- Medical Expenses
A significant percentage of Bankruptcy is due to the high medical bills one fails to pay or time loss from work. High deductibles from one’s earning, or job loss is a significant impact even with health insurance. Serious ailment or injury can lead to high medical bills that can wipe all your earnings, savings, and home equity.
After consuming all your savings and earnings, the only option is Bankruptcy. It does not matter whether the family members or the patient was able to apply for medical coverage for his medical bills or not.
- Poor Use of Credit
It is hard for some people to control their spending. Within a short time, cars, credit card bills, and other loans go out of control. Thus, it becomes hard to pay even a minimal amount for the loans. If you cannot get a debt consolidation loan or access any fund from your colleagues or family, declaring Bankruptcy is the only alternative. The debt-consolidation loan fails at times due to various reasons, thus delaying one from filing for Bankruptcy.
- Separation or Divorce
Marital cessations lead to the financial crisis for both partners in numerous ways. First is the legal fee, which may turn out tremendous in most cases. Then comes the division of assets, alimony, child support, and the cost of managing two separate homes after the separation.
Legal cost is one reason why some file, but when it comes to wage garnishment to cover for alimony or child support, it becomes hard for others to pay the other bills. Failure to pay for the support, as indicated in the agreement, leaves the other deprived at times. Thus, the next step is declaring Bankruptcy. In case of these issues during a divorce, it is best to consult a bankruptcy attorney for advice.
- Unexpected Expenses
Losing properties due to calamities like an earthquake with no insurance coverage may force you into Bankruptcy. Several homeowners do not know the need to take separate coverage to cover for natural disasters like floods.
Those with no separate coverage for this end up losing not only their homes but also their possessions. It means they will have to find an immediate alternative to cater for their shelter, food, and even clothing for those who lost their wardrobes.
There are numerous reasons to declare Bankruptcy. But at times, the use of common sense and financial planning may lead you out of this problem. If it is a hindrance factor in your future planning and financial crisis, you should seek a bankruptcy attorney from Fair Free Legal Services to help you in the matter before opting for the option. They are conversant with bankruptcy law and will help you overcome it in various ways.
Fair Fee Legal Services
8665 South Eastern Avenue, Suite 101 Las Vegas, NV 89123