Change is constant in our lives. However, that does not always mean that these changes are positive. Unforeseen changes can disrupt your life – and many can impact your finances as well.
So, what are some of these events that can increase the financial strain you face?
4 events that could result in bankruptcy
Of course, everyone faces different circumstances that can significantly affect their finances. There is no telling what exactly can cause debt to become unmanageable. However, there are a few common situations that could lead individuals to seek debt relief. These frequently include:
- Facing medical emergencies: According to CNBC, medical expenses are one of the most common circumstances that lead to bankruptcy. The 2019 report stated that nearly 66.5% of bankruptcy cases cited health care costs as the primary issue that led to the filing. It is no secret that medical care and procedures can be expensive, especially when insurance does not cover them.
- Suffering other emergencies: Not all emergencies involve medical costs. Whether it is a car accident, a theft or storm damage to your home, the expenses to replace or restore can be significant.
- Losing a job: Job loss can cause a drastic loss of income and benefits. This can make it difficult to provide for your family or pay the bills.
- Getting divorced: There are some cases where divorce could contribute to struggles with debt – and, in turn, bankruptcy. After all, in a divorce, New Mexico spouses must divide property equally and then adjust to living on one income. Despite the courts’ efforts to maintain each spouse’s standard of living, individuals could still face financial challenges after a divorce.
The emotional stress of these scenarios only adds to the financial stress you could face. And if individuals already have debt – or struggle with repaying debts – these events often only exacerbate that burden as well.
Remember: Events leading to bankruptcy are often unexpected
Most of the situations listed above take you by surprise. No one plans to lose a job, be involved in a car accident or face a serious medical issue. The fact that these events are unexpected is important to consider. Even if individuals have an emergency savings account, these unexpected events can still create unexpected challenges.
While it is critical to be aware of the financial difficulties these events pose, bankruptcy is not something you should fear or feel shame about. It can help you find relief from these financial difficulties and the debt you face when things do not go as planned.