What Are The Causes Of Bankruptcy?

What Are The Causes Of Bankruptcy?

Avoiding bankruptcy is best accomplished when you understand the reasons why most people file for it in the first place. Usually, it will take several of these situations happening all together which forces someone into bankruptcy.

  1. Poor Budgeting and Spending Habits.  As you might expect, living above one’s means is a contributing factor in many bankruptcies. Normally, it takes a personal disaster to push those who manage their finances poorly over the edge into bankruptcy.

  2. Personal disasters. So-called “acts of God” such as natural disasters and major illnesses can put even the most diligent saver into a position where he or she qualifies for bankruptcy because of the massive costs associated with such events. Good insurance and saving habits can reduce the chances of these things happening, but they do not take all the financial risk out of life.

  3. Income loss or reduction. The loss of income or a severe reduction in what you earn from your job can push you over the edge into bankruptcy. This can happen through the loss of employment, a salary reduction, or any other work-related difficulty.

If you’re looking for a credit counsellor in Toronto, get a quick assessment with us today or call us at 416.900.2324. We will help you develop a plan, reduce your interest costs and get out of debt over time.