Life’s challenges are at the heart of a lot of bankruptcies. People don’t mean to not pay their bills, but sometimes a very real problem arises, where the normally responsible person finds themselves no longer able to keep up with the bills of everyday life. This is when bankruptcy becomes a very real thought and in some cases the only option.
One or both of the “money makers” have been disabled, leaving them unable to work. The time unable to work adds up, it may be a week with no pay, a month or even a year or more.
An addiction of any kind, alcohol, drugs, gambling and yes even food addictions can cause someone to be late on payments and once the person realizes that she or he has an addiction and needs help it may be too late to catch up on the payments, thus the only option is bankruptcy.
Commercials all say “you need it” so therefore people go and get it, using their charge cards if they have no money on hand. Instead of waiting until they have the cash to get an item that is not really a necessity.
Lack of discipline
Being unable to stop spending either by one spouse or the other or both, either way discipline is not being practiced. The person or persons continue to spend without thinking of the repercussions they will have to deal with later, such as paying for these items at a latter date.
Banks and lenders can be a part of the problem, although lenders can’t always foresee the future and what potential problems their customers may face in the future, they should use a little more caution when issuing a loan. As it stands right now the banks use a formula which is nice, but it should give more of a cushion to the person asking for a loan.
For example if their potential customer would like to buy a house, the bank would first do their formula with the basic information; income vs. debt and let’s say that the bank concludes that their customer can afford a $1,000 home, the bank should then deduct a five percent miscellaneous expenses that both the bank and potential customer may have in the future from that $1,000. Is this going to make a lot of people upset, perhaps, but in the future they will thank the bank and the bank may thank themselves for adding that miscellaneous deduction.
Unfortunately life does happen no matter how well it’s planned and even responsible people sometimes get caught in the challenges of life.