Congress recently made it more difficult to qualify for bankruptcy. With the state of the economy, unemployment at an all time high, foreclosures looms in every neighbor hood, and credit cards charging exorbitant interest rates individuals are finding it difficult to escape the burden of debt. What are the root causes of Bankruptcy? Below you will discover the top 5 causes.
1. Unemployment
Many families have two incomes but the loss of just one is usually enough to push people to the brink of financial despair. Lack of savings, high debt combined with no income is a recipe for disaster. Unemployment income is usually much lower than what they previously earned and it’s taxed! Bottom-line people start to juggle payments, fees start to accrue, balances increase and notices start to fill their mailbox.
2. Credit Card Burden
We are constantly bombarded from all sources of media with messages that we “need” more stuff! We need bigger TV’s, new cars, new face, straight teeth, this gadget and that gadget. We have bills that our great grand parents would never imagine. We buy things that never make it out of the package and much of it could not be resold for 10% of its original value and we buy it all on CREDIT!
3. Natural Disasters and Lack of Insurance
It does happen, Weather, Mother Nature does what she wants. Tornadoes, hurricanes, blizzards, earthquakes, tsunamis, volcanoes, flooding all can wipe out a business or your residence. Sometimes there is government money but usually to late. Losing your home and belongings can affect your job and you can become a statistic of reason number 1.
4. Ending Relationships
Divorce and Separation destroy finances in several ways. High cost of litigation, division of assets, garnished wages and non payment of support lead to difficult financial times for all involved.
5. Illness/Injury
Whether it happens to an individual or someone they love illness and injury can wreak havoc on your finances. People sometimes have to leave a job or are terminated because they need to take care of a spouse, child or parent. Lack of Insurance can also attribute to exorbitant medical bills.
Summary: The above 5 causes can be nullified or minimized with proper planning, insurance coverage, savings and my favorite additional passive income from a home based business!