The term bankruptcy is not new, actually it is something people hear about multiple times. Nevertheless there are a number of people who do not understand the concept of bankruptcy. Some do not even get how things go down 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. Once someone files for bankruptcy, this usually opens their finances to public inspection. People may do this for a number of reasons; some even say that bankruptcy can help prevent foreclosure. Here are a few reasons why people may go bankrupt.
Divorce does not always end well for either parties. Going through a separation or a divorce can be quite a costly affair. It can mean that either or both partners lose a significant amount of their assets and income. It can also mean that you share your partner’s debt in a situation where you had an open joint account. Find out for further details at this website.
Losing One’s Source of Income
Losing a job can quickly result to a high reduction of one’s assets and savings. This may also bring with it some added expenses that may be problematic in your financial situation. It can be worse if you don’t have a guarantee of restoring your financial position through a job or some other venture.
Research studies show that medical expenses cause 62% of personal bankruptcy. Those that think insured people face more financial catastrophes are quite wrong. According to a study done by Harvard University nearly 72% of those that have filed for bankruptcy have health insurance.
A continuous pile up of problems can result to a serious credit debt. 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.
Paying for school is probably one of the most expensive things one can do. In the United States at least one percent of bankruptcy is as a result of students loans. In a year this is approximately 15,000 cases.
Reduced or Little Income
Salaries sometimes go down and budget cuts also tend to affect employees. Companies are cutting down their expenses and this may result to some employees experiencing reduced bonuses, and serious pay cuts. This can bring about a huge financial strain for those employees working on other businesses and have families to take care of. The end result for such individuals in most cases is bankruptcy.
Sometimes one may experience an unexpected catastrophe that may force you to spend a lot of money especially if you are not insured. This may include things such as earthquakes, floods, and tornadoes, which may lead to the loss of a lot of property. Take a look at this link http://www.ehow.com/about_7528894_truth-bankruptcy.html for more information.