Overspending or spending more than is coming in, is the #1 cause of people falling into Bankruptcy. Sometimes overspending is unavoidable due to emergencies and job loss, but many times it is due to people spending emotionally rather than rationally and ending up spending more than they have brought in. Once that happens it is difficult to get caught-up. Especially, when you tack on interest. In 2009, the Census Bureau reported that Americans spend $1.33 for every dollar earned.
Job Loss, unfortunately unemployment is a very common occurrence in this economy and it is often times unavoidable.
Experts recommend having up to a year’s worth of income saved up in case you lose your job. While coming up with that much money fast is usually unrealistic, you can start by setting aside a few months worth of savings and build on it.
Divorce is another top contributor to Bankruptcy. Legal fees, child support, alimony, and the cost of keeping up two households only compounds financial woes, so think twice before splitting.
Disasters! You can not control the weather, but you may want to consider purchasing disaster insurance to cover you in case of a flood or fire. Most importantly, be clear on what your homeowners or renters insurance covers, often times flood insurance has to be purchased separately.
If you do find yourself in a situation where Bankruptcy is necessary it is important to consult with a Bankruptcy attorney that can advice you so that you do not end up getting into another sticky situation. Be aware of what debts may not be solved by bankruptcy, such as large recent cash advances, large recent credit card charges, taxes, child support and alimony.
If your bills have gotten out of control and you are considering bankruptcy, please give my office, The Law Offices of Todd M. Friedman a call today at (877) 449-8898.