Bankruptcy is not the kind of thing that happens suddenly. One might even say that it can be compared to a terminal disease — there are no drastic signs to help you become more aware of its existence.

And when you do find out that you are already a glowing candidate for this process, there is nothing you can do to prevent it. So instead, you start wondering why you didn’t see it coming.

The truth is, there are many different reasons that lead to a person’s bankruptcy. And while it’s too late for you to do something about it now, there is no reason why you cannot recover once you go through the process.

In fact, knowing about the different situations that lead to bankruptcy can help you in assessing your financial status in the future.

Job Loss

One of the top reasons that an lead to bankruptcy is job loss. When you lose your job, your bills will continue to pile up, and unless you find some gainful employment quickly, your chances for filling for bankruptcy increases daily.

The pressure for relieve from your ever increasing monthly bills is compounded if you have kids at home.

Sadly, most people that lose their job never saw it coming. So if you’re gainfully employed, pay close attention to your firm’s fortune, as it’s realistically tied to yours.

Excess Credit

If you’ve lost track of your senses, and accumulated massive credit debts, bankruptcy might be the only option you have left to consider.

Most people want the finer things in life, but most fail to anticipate the pitfalls of borrowing too much, too soon.

Borrowing to buy depreciating personal property is not the wisest financial move one can make. Most bankruptcies can be traced to excess credit incurred by the individual.

Poor Financial Decisions

Another situation that leads to bankruptcy is when a person always makes poor financial decisions.

If you only invest when other people are doing the same thing, you’ll rarely have financial success, but much financial disaster.

It’s like most people buy stocks when the prices are too high. The time to make your investment is when other people are not buying.

Bankruptcy might be the only solution left for those that have gotten caught up the latest financial schemes that resulted in massive losses.

This often happens to people who are fond of investing in financial schemes that are not guaranteed. It also happens to people who do not try to spend time weighing all of the consequences of their decisions.

Just like a terminal disease, the signs that you are already in for bankruptcy do not manifest early.

However, this doesn’t mean you shouldn’t keep your financial habits in check. After all, good financial habits are like ounces of prevention that are better than a pound of financial cure.

Divorce

Believe it or not, getting divorced can lead to bankruptcy. I have seen couples spend the family fortune fighting each other, enabled by greedy lawyers, bleeding them dry.

When they finally come to their senses, most of the money is gone, and what remains are the debts that both can be held responsible for.

In one case, the wife signed for everything and she was left holding the bag, and liable for the tens of thousands of dollars in credit card debt, while the husband just walked away free to start over again.

Tax Debt

Sometimes what you owe the government is so large, that the only viable recourse is to file for bankruptcy.

Make sure you consult a professional lawyer attorney, to make sure the tax debts can be discharged with your bankruptcy filling. 

Civil Court Judgment

When involved in a civil lawsuit, you never know where the winds of justice might blow, especially if you can end up owing thousands or millions of dollars.

A court judgment that can wipe you out financial, certainly calls for some form of bankruptcy protection to help preserve some wealth.

Business Loan Judgment

From past experience as a business owner, you’ll have many failures before actually finding your true passion and success. Unfortunately, some of your failures might mean fighting for your financial life in bankruptcy court.

This is why it’s crucial to consult a knowledgeable attorney, before setting up your business enterprise. You want to eliminate the need for any personal recourse, especially when seeking business loans or credit.

As a Personal Concern

Bankruptcy is not the end of your financial life. In fact, until you have experienced some failures, you might never know much success. Seek good legal advice, if you’re faced with a dare financial situation.

If you’re dealing with creditors, and you find it difficult to pay, get a legal attorney to speak on your behalf. Sometimes the creditors might lower the amount owed and the monthly payments, threatened with bankruptcy filling.

Let your lawyer talk to their lawyer, and you might get lucky, and totally avoid the need to file for any bankruptcy, thus preserving some of your financial health.

Even if you did file for one, you can still bounce back, as long as you keep your spirits high, and come up with a better business plan. The only time you truly lose in life, is when you stop trying.

Learn from your mistakes, and strive to try again. Our history is full of individuals that failed many times, but never gave up, until success smiled on them