The volatile market that the start of 2020 has bestowed upon the world is quite sensitive. Forbes, in its magazine, has already predicted that the market in 2020 will be volatile. There are specific turning points in the global market which directly or indirectly affect individuals of the lowest levels. However, the dramatic rise in the number of bankrupts in Australia is just huge. Let’s for a moment does not consider that the global economy affects these bankrupts so much.
According to the best bankruptcy advisors across the world, the most common reasons for people going bankrupt are a sudden increase in medical expenses, job loss, and poor use of credit.
Let’s have a look at these in detail
The flu season last year was one of the worst in recent times in Australia. Apart from those, the bushfires and other incidents also posed a threat to the medical expenses of the population. Here’s an interesting statistic for you:
A study at Harvard University proves that the most significant cause of personal bankruptcy is medical expenses, and it represents close to 62%.
Severe medical conditions can result in huge medical bills which can at times become too much for people to pay. There will be times when even the health insurance won’t suffice to the actual costs. Once your money is over, hiring a bankruptcy advisor will be the last resort for you.
Here’s one more reason that most bankruptcy advisors ask people to take special care of. A job loss can happen due to various reasons. It can be a significant layoff, termination due to some reason, or resignation from your post. These can be devastating if you don’t have any saving to cope up the lack of money you’d be having. Bankruptcy advisors recognise this as a situation when paying bills with credit cards can carry you to bankruptcy.
Insurance coverage and other assets can diminish in such times. It would help if you had a firm plan to overcome this situation. You have to find a stable source of income to overcome this unemployment situation.
- Build an emergency fund to stay away from entering the bankrupt state.
- Most bankruptcy advisors and financial experts recommend having a vast reserve which can cover at least 6-8 months of you being unemployed.
- Set your financial goals and see that you are saving enough for this.
Poor use of credit
“You really need to control your spending when you see signs of a major financial crisis in your life.”, says a bankruptcy advisor located in Sydney, Australia. Well, most of them will suggest the same. Some people can’t control their expenditure and tend to waste money on unnecessary things, even after they have entered the financial crisis. Your monthly bills and instalments can turn back to bite you when you have used all the funds in your credit cards. There will be a time when you will not be able even to pay the minimum payment of your instalments.
This will be a time when even the creditors will prevent themselves from providing you with any loan. Your credit score will go down, as a result of which, your debts will go up, and you will be taking steps closer to hiring a bankruptcy advisor and file bankruptcy.
The bottom line,
Bankruptcy is a severe condition, and one must take all possible steps to prevent themselves from entering this phase. However, if one has already entered into a bankrupt state, then the best step he/she can take is to hire a compliant bankruptcy advisor who can help them take steps to bring them out of this situation.