<strong>Why Do People Go Bankrupt?</strong>

Why Do People Go Bankrupt?

The bankruptcy rates are alarming. The number of people unable to settle their debts is increasing by the day. Therefore, if you’re considering bankruptcy, you aren’t alone. However, it is important to know the cause of the problem to try and gain control of your debts.

Medical Expenses

Medical bills can be expensive, although the Affordable Care Act tries to help by limiting out-of-pocket costs for consumers. But even with protection in place, it’s easy to have unmanageable bills. Overwhelming bills are a common problem for people who require extensive treatment.

Losing a Job

After losing your job, you can end up in bankruptcy court very quickly. If you are paying a mortgage or putting food on the table, you could lose your home to foreclosure if your source of income is terminated.

Emergencies

Natural calamities can cause bankruptcy. These are situations where people lose their homes and other assets due to floods or earthquakes. When there’s a calamity, it’s impossible to work, leading to a loss of income.

College Loan

Student loan debt is a major reason why people choose to file for bankruptcy protection, according to a report by the Consumer Financial Protection Bureau (CFPB). Student loan debt can also delay major life events, such as buying a house.

Divorce

If you’re going through a divorce, your expenses will go up dramatically, especially if children are involved. If your spouse has been paying all of your bills, it can be hard to foot them alone. It is best to understand the bankruptcy law Orlando-based and take the necessary steps.

Credit Card

Credit card mismanagement can lead to large debts that are almost impossible to pay off due to high-interest rates and penalties for late payments. Also, people go bankrupt because they spend more than they earn.

Although some of the consequences bankruptcy causes cannot be avoided, it is best to take charge of your debts early. Always create a budget, get health insurance, and establish a savings plan. But, regardless of your financial difficulties, you can contact a bankruptcy trustee to help you solve the issue.