Bankruptcy is a situation which no one wants to end up in. It is a legal proceeding in which a business or an individual can’t pay debts that they have. Here are some of the factors that lead to this state
Losing a job can be quite devastating. This is because the source of income is suddenly cut off. It is even more devastating for those who have only one source of income and they don’t have savings. All in all, this is a major cause of bankruptcy. Losing a job means losing some privileges like medical covers. This means that one has to pay for every expenditure. Some people might be lucky to be compensated, but those who are not will still have expenses yet they have no money to cover their expenses. That will eventually lead to bankruptcy.
Poor Use Of Credit
It is difficult for some people to control their spending. Impulse buyers have a tendency to end up in bankruptcy. Loan payments and credit card bills if not used when needed mostly could mess someone up financially. An individual will be used to this kind of behavior until they can no longer make minimum payments. When it gets to that point and a person can’t access funds, bankruptcy is inevitable.
Every now and then, all individuals are expected to pay for some unexpected expenses. That is why financial planning and saving is advised. There could be unforeseen events that require dishing …