Most common causes of personal bankruptcy
Personal bankruptcy can be a difficult period for an individual. It is caused mostly by unexpected changes in your life like loss of income, enormous medical bills, etc. due to a serious injury. People often want a debt-free life. They also try to rely on a steady income source to manage their house bills and maintain a good standard of living. However, sometimes circumstances like a recession in the economy can lead to the loss of jobs, which in turn leads to depleted savings that can no longer pay your bills. In such instances, people often file for personal bankruptcy, and here comes the need of a personal bankruptcy attorney.
The most common causes of personal bankruptcy are:-
Bad spending habits: Irresponsible spending habits are a common cause of personal bankruptcy. This is often prevalent among young individuals who spend a lot on gadgets, expensive cars, lavish holidays, etc. without being mindful of how much to spend and how much to save. Due to no financial planning, these people end up in a troubled situation during uncertainty like a serious injury, loss of job, emergency medical situation, etc.
Underemployment: Underemployment often leads to bankruptcy. With the rise of technology and everything getting automated, many employment opportunities are being slashed and taken over by machines. In such a scenario, people constantly need to upskill themselves to survive. However, not all can afford to do so. Even though people take 3 to 4 jobs to make their ends meet, it is not beneficial as most part-time or freelancing jobs do not provide any benefits to their employees.
Poor financial planning: Proper financial planning in consultation with an experienced financial planner is extremely necessary for a healthy financial life. It will help you expand your money by investing in numerous types of financial tools and not just putting all your eggs in one basket. Without a financial plan, you just end up spending and owing money which keeps adding up and one day might just collapse.
Serious injury or medical conditions: A serious injury or a medical condition can make you lose your job as you are not physically fit to do it. On top of that, the medical bills keep piling up adding to your expenses. A prolonged illness or injury can lead to financial turmoil.
The cause of personal bankruptcy can be anything from negligent financial behavior to financial turmoil caused due to a tough economic situation. If you have reached a tough situation in your life where you are not able to cope with the debts that you have taken, it is much better to file a bankruptcy. However, before taking such a step it is wise to consult a bankruptcy lawyer to guide you through the whole process in a better manner.