The modern era has brought in various pressures in the form of trends like mass consumerism, which signifies the importance of buying and consuming things at a rapid rate. As a result, people are spending much more they can afford and end up getting deluged in debts.
This is the reason why more and more people are filing for bankruptcy, and resultantly, businesses of competent attorneys like Ohio bankruptcy lawyer are touching newer heights of success. You may already be aware of basic details about bankruptcy, but not many people realize the major reasons behind the increase in bankruptcy rates. Therefore, we have listed here eight most common reasons people end up declaring bankruptcy.
Sudden loss of employment leads to loads of financial issues even if you have got an excellent severance plan because expenses start to dig deep into the savings in no time.
- Consumer debt:
The increasing debt of cash advance loans or credit cards does not always signify reckless spending because it can also be due to expensive emergencies like illnesses, disability, or even sudden loss of employment.
- Medical Expenses:
A study conducted by Harvard University concludes that 62 percent of total bankruptcies are filed by people who are unable to afford their medical expenses. Moreover, the common understanding is that those people must not have had medical insurance, which is surprisingly not the case here because 72 percent of these people had some sort of health insurance. Therefore, it debunks the myth that only the uninsured face bankruptcies due to burgeoning medical expenses.
Divorces are not only mentally chaotic, but they also create a lot of strain on the finances of both partners, even if you subtract the lawyer’s fees from the overall expense. It is quite simple to understand as initially, both the spouses were responsible for meeting the expenses of one home, and now they both will have to address the expenditures of each home individually. Clearly, it will increase the strain on the financial dynamics so much that many people end up being bankrupt after divorce.
- Unforeseen expenses:
No matter how meticulously you plan, you will always face the risk of facing emergencies that bring with them scary costs. In extreme cases, earning hands of the home find themselves unable to cope with these uncertainties, and resultantly, end up getting bankrupt.
- Student Loans:
Even after landing decent jobs after graduation, loads of people struggle to pay back the student loans amid other expenses. According to various reports, around 15000 people file for bankruptcies in the United States annually due to student loans.
- Business Debt:
Loads of entrepreneurs start their ventures every year in the hope that they will build a whole empire out of it, but only a few manage to succeed. The rest of them struggle, and as most of such businesses are started on loans, and they find it virtually impossible to pay off the debt.
- Poor Planning:
Poor budgeting and overspending can result in spending more than you can afford, and as a result, you end up getting behind on your credit payments.