Are you in financial distress? Do you struggle to keep up with your bills? There are a few things that can happen that could make it difficult for you to get by, no matter how much money or time you put into your efforts.
Understanding the reasons why many people go bankrupt can help you to develop a plan of action for your own financial situation. Knowing what situations can lead to applying for a bankruptcy loan is important to avoid these unfortunate circumstances.
What is bankruptcy?
Bankruptcy is a legal procedure in which an individual’s debts are settled by the court. This means that the individual will not be able to pay back their debts such as mortgage, car loans, credit card debt, or any other type of debt. They are able to file for bankruptcy if they can prove that they cannot pay their bills as they should otherwise.
Circumstances That Can Lead To Bankruptcy
If you think that your financial future is secure, a crisis may be right around the corner. Even if you have a good-paying job, you can still find yourself in a financial crisis. This emergency can consume all your savings and you may have to file for bankruptcy.
Here are the top 9 life circumstances that can lead to bankruptcy if you’re unprepared.
- A sudden increase in your healthcare costs has the potential to push you into bankruptcy. When you are diagnosed with cancer, diabetes, or a heart condition, these costs skyrocket. If you didn’t save up enough money and are unable to cover these expenses, filing for Chapter 7 Bankruptcy may be your best option.
- Some circumstances can happen that your company will lay off you overnight, even though you are a valuable employee. If a company has to downsize, they don’t always tell their workers until the last minute. You may be left without any money coming in, and you can’t pay your bills because you have nothing left in your savings account to help cover the expenses.
Some divorces end with one spouse not only receiving all of the assets from the relationship but also being ordered to pay alimony. When this happens and there are children involved, the wife may receive all of the community assets and property even if she was not working during the marriage. Additionally, if there are children involved, child support is typically determined by using 25% of her income per month.
- A natural tragedy or a house fire can be devastating to people. If you own a home that was destroyed by a fire, you will want to file for Chapter 13 bankruptcy protection. You will be able to keep your home and any additional belongings that were not destroyed in the fire, but you will still lose the money spent on furniture, cars, and other personal items.
- A serious illness can be overwhelming. When a single person is diagnosed with cancer, for example, it can be very difficult to handle. Facing this illness can put you in debt quickly because of the extreme costs associated with treatment.
- Dealing with the loss of a loved one is one of the hardest experiences you can have in life. Losing someone that you love can cause an unbearable amount of grief that will affect your ability to work and cope with life in general. Dealing with these feelings without the help from family or friends may lead to depression and financial distress as well
- An important part of debt management is credit cards but if you miss a few payments or unplanned expenses, the interest can go up quickly and you’ll be back at square one. A financial emergency can strike at any time, so it is important to always have a plan in place, and even the best debt management should have a backup plan for when things go wrong.
Your salary may be fixed, but if you don’t receive your paycheck on time or if you are paid late, you may not have enough money to pay all of your bills. If you don’t save up enough money to cover these expenses, then filing for Chapter 7 bankruptcy can help reduce the amount of interest that is accruing on your debts.
- A legal judgment or case against you for any reason can lead to financial difficulties. If you were involved in a legal case, even if it was not against you personally but involved someone else or a government agency, like the police or airline, for example, you may be put into debt by them. You will have to pay immeasurable amounts of money to get back the money that is owed to you and filing for bankruptcy may be your only option.
Things You Should Do To Avoid Financial Crises?
1.Start saving your money from the day you get your first paycheck. Have a percentage of your paycheck automatically deposited into your savings account so you always have money saved up to cover emergencies and unexpected expenses. This way, you won’t rely on the use of credit cards or loans to cover these expenses.
2.Create a budget for all of your income, including any extra money that is left over after paying all of your bills. Then, find ways to cut back on expenses so you can put more money towards savings and investments.
3.Think about what your retirement plans are and whether or not you are saving enough to cover expenses if you retire.
4.Set goals, take action and keep hustling so you can reach those goals.
5.Make sure your expenses match up with your income so you don’t have to use your credit cards or loans for things that don’t need to be paid at this point in time.
6.Take advantage of any small savings benefits that your employer may offer like a flexible spending account or a health savings account for medical expenses.
7.Try to find a part-time job or freelance work you can do from home for extra income.
8.Sometimes your spouse, family, or friends may offer to help you pay off your debt if you are in financial trouble, but if they aren’t ready and able to offer a long-term solution that will help you pay off your debts and get back on track financially, then filing for bankruptcy may be your best option.
If you are struggling with financial difficulties, giving yourself time to come up with a plan of action may help save you from falling into this difficult situation. It is recommended that you seek professional consultation to prevent bankruptcy. You can also take a bankruptcy loan from a reliable bank or a reliable lending institution such as Canadian Cash Solutions. Filing for bankruptcy can be an option, but it doesn’t have to be the only one. You have to exhaust all of your options and understand what you are supposed to do.