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4 common causes of bankruptcy

On Behalf of | Dec 11, 2022 | Bankruptcy

People rarely file for bankruptcy because of one reason. Oftentimes, for example, bankruptcy happens because someone developed a serious medical condition after taking on a mortgage. Or, someone with poor impulse control took out a loan.

Whatever the case may be, there are several scenarios that may cause someone’s debt to overwhelm them. Here’s what you should know:

1. Divorce

Divorce can be tricky, especially when it comes to dividing debt. Debt can be divided in a divorce and that could mean taking on debt that your ex-spouse created. Also, divorce means you’ll lose the combined income of you and your spouse, making it hard to pay off existing debt.

2. Unemployment 

There’s no worse way to struggle to pay off your debt than losing your job. There’s no question that, without a job, debt and late payments can pile up, making it seem near impossible to pay it all back. 

3. Medical expenses

People can develop a serious medical condition seemingly out of nowhere. When this happens, and you aren’t prepared, you could easily build up a ton of medical debt. Your medical condition could even make it difficult to work, thus, making it hard to pay back your medical debt.

4. Overspending

Almost everyone spends above their limit now and again, but problems start to occur when people make a habit of overspending. Overspending can quickly cause someone to build up more debt than they can pay off. It often doesn’t help that creditors give people more chances to create debt when they see debtors spending so much.

If you’re in over your head with debt, then you may need to know your options. One of the easiest methods to remove debt may be bankruptcy.