Most of us have heard of common causes for bankruptcy. It’s often thought that people go bankrupt because they spend money recklessly or take on too much debt, but the truth is that there are many other common causes as well. This article will discuss some frequent ways people go bankrupt.
Poor Money Management
A lot of people in Ohio do not know how to arrange the expenses they have. When you consult with a Youngstown bankruptcy attorney they will tell you that a lack of money management skills is one of the leading causes of bankruptcy. This poor management can be due to not knowing which bills are more important, or just spending too much without thinking about what you have now and in the future.
You have to learn how to live within your means, and this includes not only the things that you purchase each month but also your debts and obligations. When you are able to manage your money well it will free up more cash flow for savings or investments down the line. Start by evaluating what is important to you. Do you need cable TV, a smartphone plan with all of the bells and whistles, or do you want to be able to save for retirement?
Making small changes in your spending habits can add up over time and help get you closer to your financial goals. For example, if you brown-bag your lunch instead of eating out every day during the workweek that could save you around $40 per week. Or maybe consider scaling back on your entertainment budget and put that money towards your student loans.
Not Paying Attention To Your Credit Score
Your credit score can be a determining factor in not only if you will receive credit, but at what interest rate. When people are not paying attention to their credit score and not looking into how they can improve it, this is when they start having issues with not being able to get loans or even worse, getting loans at high rates because of the bad credit score.
When someone doesn’t pay attention to their credit scores for extended periods of time, then there’s usually something else going on that needs more immediate attention than the low scores. However, knowing about your score can help you tackle debt problems before they arise so that nothing happens unexpectedly like bankruptcy.
People who don’t keep track of their money often find themselves unable to make ends meet due to unforeseen circumstances. This is especially true if you’re not keeping track of your credit score because that’s a one-factor creditor will look at when considering a loan. If you’ve been having trouble making payments, then it might be time to take a closer look at your credit report and see where you can make improvements.
Unexpected Expenses
At a certain point in life, everyone will experience some unexpected expenses. These can be anything from a car repair bill to an unexpected medical expense. For many people, these unexpected expenses are manageable and they are able to pay them off over time. However, for others, the unexpected expenses become too much and they find themselves filing for bankruptcy.
There are a number of reasons why someone might experience unexpected expenses. Here are some that often happens:
- medical emergencies
- job loss
- misfortune
- theft or vandalism of property
- repairs at home or on a car
- natural disasters
When unexpected expenses come up, it can be easy to get in over your head with debt and not know how you are going to pay them off. If this happens, you may want to consider filing for bankruptcy protection so that the unexpected expenses do not become a financial disaster.
Filing for bankruptcy is not something that you should take lightly, but it can be a good option for those who are struggling with debt. If you are considering filing for bankruptcy, it is important to speak with an experienced attorney who can help you understand your options and guide you through the process.
Lack Of Income
When you’re not making enough money to cover your expenses, it’s likely you’re going to find yourself in a tough financial situation. In fact, lack of income is the top reason for declaring bankruptcy.
Income can come from a variety of sources including social security checks, pensions, and savings accounts. Without an income coming in every month to cover your expenses or a lack thereof, you may find yourself struggling with debt payments significantly more than other people around you. These struggles could lead to missing bill payments which will accumulate interest charges on them making repayment even harder down the line as well as putting your credit at risk if not managed properly by filing bankruptcy.
Lawsuits
When you get into a lawsuit, whether as a plaintiff or defendant, it can be easy to bury your head in the sand and ignore what’s going on. This is especially true if you’re not sure how lawsuits work. However, lawsuits are one of the biggest causes of bankruptcy filings, so ignoring that lawsuit isn’t going to make it go away.
Lawsuits will affect your credit score negatively because they remain on file for several years after being closed out. If you have been served with a suit against you, no matter how silly it may seem, don’t wait around thinking about filing for bankruptcy later down the road. At this point, there could still be time to stop things from snowballing into something bigger than just a nuisance! When people think about lawsuits, they often think lawsuits are only about money. This is not true at all! Lawsuits can be filed for personal damages as well!
Divorce
In cases of divorce, especially for men, it can be emotionally and financially draining. It is important to note that this does not necessarily mean getting bankrupt or insolvent because there are other ways to manage and divide marital assets. However, getting divorced can be one of the leading causes of bankruptcy for both men and women in the United States.
When it comes to getting divorced, it is important to know your rights. If getting divorced does lead you to bankruptcy, there are ways that you can manage the situation and even prevent this from happening again in the future.
Bankruptcy is something nobody wants to experience, yet many people do. It’s usually due to a lack of management skills or not being careful enough when it comes to credit scores. There are a lot of unexpected expenses that can also lead to this as well as not having a job or not being paid enough to cover all expenses. Lots of lawsuits are financially draining and divorces as well. Always learn how to manage your money and be careful!
