|Why People File Bankruptcy|
|Written by Administrator|
Although there may be an unfair stigma attached to seeking debt relief, do not be misled.
Good people file bankruptcy.
With the unemployment rate rising to the double digits, many individuals simply have no other option than to file for bankruptcy protection. In addition, a large segment of society is only one or two paychecks away from destitution, if an accident or illness prevents them from working. If you are considering bankruptcy, you are not alone.
Poor Financial Decisions
The number of people who are to the point of filing for bankruptcy due to poor financial decisions is probably in the thousands or millions.The main culprit, of course, is credit cards. Our inability to see into the future allows us to make regular purchases with the credit card, without ever anticipating the likelihood that we would become ill or lose our jobs. Unfortunately, the bill will eventually come in the mail. Unless you keep track of exactly what you spend, and have a reliable source of income each month, you can get into financial trouble pretty quickly and bankruptcy is only a heartbeat away.
Some people pay all of their bills via credit cards, using them for their benefits program. They successful pay them off monthly to avoid the penalties and interest. The majority of people have a monthly balance due, with significant interest, and they can never seem to get out of the hole.
Credit card companies are very quick to blame the customer. However, did you know that the majority of credit card applications are sent to people between the ages of 18-25? This age group is the primary target because they are relatively new to financial responsibility and have a greater potential of accumulating massive amounts of debt.
Of course, credit cards are not the only source of poor financial planning. Often, it is simply making a major purchase without the paycheck to back it up. For example, many people have gotten in over their heads after purchasing houses with adjustable-rate mortgages. When it comes time for the rate to change, the monthly payment is out of reach.
Unemployment is also a contributing factor to bankruptcy.
Some have worked for the same company for decades, yet have become victims of downsizing or businesses that have had to close because of the economy. Unfortunately, finding a new job beyond the age of forty can be quite a challenge. The younger generation is less likely to get sick or need major health care. In addition, they have been to school more recently.
Illness and Injury
Statistically speaking, the majority of individuals are essentially one paycheck away from being in financial trouble. As a rule of thumb, financial advice says to have at least 6 months worth of income in the bank. Realistically, most people are just squeaking by financially. What most people fail to consider, however, is the potential for them to sustain an injury or to become seriously ill.