Bankruptcy does not always happen the way you assume. There are many reasons people get into financial trouble, some of which they have no control over themselves. It is important to understand these reasons as you consider all of your options.
Five reasons why someone might file for bankruptcy protection include the following:
Losing a job
Your employment could be more fragile than you realize. All it takes is one round of economy-driven cutbacks to find yourself without an income.
If you suffer serious injuries, the bills can be so high that you’ll never pay them off, even if you paid for the next decade. Accidents and disease strike out of nowhere.
Business owners may have a few good years, set up their budgets accordingly and then see a massive drop in income. It’s a volatile world out there, and you cannot always predict how things are going to play out.
You often cannot discharge student loans in bankruptcy — there are rare exceptions — but they can still lead you to financial ruin. Since you have to pay them back, you may not have enough left for all of your other bills.
Spending too much
You do have the most control over your spending out of anything on this list, but even it can get out of control with little warning. Is one month of poor choices going to leave you facing insurmountable debt?
No matter why you are facing bankruptcy, make sure you are well aware of all of the legal options you have and the steps to take to get the process moving forward.