There are many reasons why people file bankruptcy, especially with the economy struggling in parts of the country.
Most bankruptcies are filed by individuals and there are many reasons why a bankrupt faces monetary challenges.
Some of the reasons people go bankrupt:
1) Job Loss: A majority of bankruptcies in Canada are caused by a job loss. Even with a severance package the loss of steady income can quickly deplete savings and put an individual in a tight financial situation.
2) Reduced Income: Some people might be able to keep their job, but at reduced hours or with the loss of potential benefits and other perks.
If you have a reduced income paying your debts can become a struggle and certain debtors consider bankruptcy to get out of debt.
3) Divorce: The cost of getting divorced can be very costly and the loss of a spouse’s income, alimony costs, and a loss of assets and property can lead to bankruptcy.
4) Living With Credit Card Debt: Credit card debt is not always from overspending or poor budgeting.
Credit debt can creep up over time due to illness, expenses for emergencies, a loss (or reduction) of income or for many reasons.