No one likes to contemplate bankruptcy, which is understandable since bankruptcy will have an effect on your financial situation for several years to come. This may be one of the reasons why a lot of people don’t seek financial guidance in times of need, because they are under the common misconception that bankruptcy is the only way to manage their financial concerns. Sadly, this isn’t the case as there are many solutions available to those experiencing financial difficulties. What many people don’t recognise is the sooner they act, the more alternatives will be generally be available to them.
If you’re facing any financial hardship, understanding the top causes of personal bankruptcy will give you awareness into what factors of your finances you need to prioritize. Our world is changing quickly and pinpointing new risks in your own financial circumstance will allow you to proactively address them. Here are some top causes of personal bankruptcy:
Excessive use of credit
This one is obvious. If you use too much credit and can’t pay it back it’s going to cause financial issues. Banks charge extravagant fees and interest charges for late credit card repayments, so if you’re already behind in your credit card repayments, do something about it now.
Unemployment
Unemployment or loss of income continues to be one of the most contributing elements of personal bankruptcy. With unemployment rates in Canada presently at 5.4%, this leaves many Canadians without a reliable income source. The best way to manage an unpredicted loss of income is to be prepared, which showcases the importance of setting up an emergency fund that can support you and your family for 3 to 6 months.
Relationship breakdowns
Another main cause of personal bankruptcies originates from relationship breakdowns. Divorce rates are continuously increasing in Canada. Even though divorces are not uncommon, financial problems arising from divorces are common given the affiliated legal fees, child support, and the abrupt transition into a one-income household. Many people find themselves inheriting debts from their partners or are unable to pay off existing credit because their expenditures have substantially increased.
The sooner you seek financial support, the more options will generally be available to you to resolve these issues. Many individuals wrestle with debt for years before seeking help. If you’re struggling financially, contact our office today for a free, no-obligation consultation. Don’t wait until bankruptcy is your only option.
