6 Factors That Will Make You Bankrupt in 2018

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There is no one who is guaranteed to be bankrupt.

In fact, average bankrupt people look a lot more like you. They can be single, married or divorced, old or young, female or male, short or tall, plumb or slim. This leads to the big question; what does it take for a person to be at a high-risk debtor while on the other hand the immediate neighbor is able to maintain being afloat? Bankruptcy Hamilton cab be described as a financial nightmare to anyone who has always enjoyed financial independence.

Truth be told, insolvency can be led by a variety of different risk behaviors and characters. Here are the top 6 factors that and reasons as to why a lot of people file bankruptcy and what can be done to escape or reduce the risk.

1. Divorce

Divorce is the first risk factor that can bring a good and successful person this year into bankruptcy. It is a misconception to many people that bankruptcy is among the major reasons that lead to a divorce. However, the opposite is true; experiencing a divorce can definitely lead one to being bankrupt.

A divorce financial impact goes beyond paying of the lawyers’ fee, court charges and the actual divvying-up of the assets at hand. Often, debts accumulate just after the divorce has occurred, because a lot of ex-spouses end up finding themselves unwillingly taking care of the needs of two households and not one. This is double living expenses.

The solution to this is that one should come up with a good strategy, especially if you suspect that your income can be stretched further after you divorce. In case you had a joint debt or credit cards with your ex-spouse to be, have them canceled and take loans individually. Your financial life should as separate as it can get but still be responsible enough to cost-share where possible.

2. Using Credit for Living Expenses

Spending big, dining in expensive restaurants, several vacations, having extravagant lifestyles and regular going on shopping sprees are the common assumptions bankrupt persons get for misusing their credit on. This might have occasionally happen. But it is just an exception and not a norm. On the actual ground, it is typical that the at-risk debtor having one reason or another relied on his or her credit cards to have ends meet. Paying for their daily living costs, clothes and food with the credit is a result of running out of money during the end of week or month. This begins as a short-time solution and without even knowing turns to be a big accumulation of debt.

The solution to this kind of problem is by, one, having to come up with a budget form where you can be able to trace and monitor not only your expenses, but also income. This can help you to avoid spending more than your budget. Second, you can choose to use your credit keenly and wisely. By this, avoid using the credit during payment of items that are of no long-term service or value.

3. Job Loss and Income Reduction

It is not true that average bankrupt persons are unemployed. This is contrary to what is popularly believed. In fact, out of ten, nine is the rating of insolvent debtors who are or were working or rather had a source of income. The rest of the percentage were either or currently have a spouse that is working or them being unemployed by the time of the debt filing.

Four out of ten of bankrupt people is job related. These people might have either experienced some sort of drop in their income due to various reasons, illness or economic conditions, or sometimes being fired from work. This may lead to using your credit in paying bills. In this case, it is important to identify and cut off unnecessary expenses.

4. Carrying Debt into Retirement

Seniors are the fastest growing group of bankrupt people. These are people that are about the age of 50 years and above and are very vulnerable to unexpected events that easily jeopardize their status financially.

Getting to a retirement age without a secure net of savings and a high debt is a big risk factor to bankruptcy. While you can, in your energetic working days have a saving strategy that can help you during your retirement days. Cutting back on unnecessary lifestyle costs soon enough is a good way to

5. Student Debt

It takes an estimated period of 14 years for an average student debtor to fully repay student loans, that is if they had any. Many graduates, especially in the recent times, have difficulties in finding an employment platform where they can get well paid. This leads to the student debt being a significant bankruptcy risk.

Students are recommended to be careful when applying for the student loans and only have the debt application when it is really necessary.

6. High-Risk Mortgages

High risk mortgage is another risk factor to bankruptcy. This often happens when the mortgage balance outweighs the house balance.

There are plenty of people who get into bankruptcy because they carry a high-ratio mortgage place which in turn is a significant risk to the financial health of the person. Be ready, at the same time careful when you engage into mortgage loans.

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