Typical Causes For Bankruptcy 

Financial elements play a crucial and severe role in each business. Bankruptcy is often one of the top factors that concern many business owners. Bankruptcy can disrupt a business significantly. Many people may think that it is easy to deal with insolvency. However, it could be tough and challenging to overcome bankruptcy. 

You should consider a Kingston, New York bankruptcy lawyer and ask them to provide legal assistance in such cases. Irresponsible or negligent financial behavior is the root cause of multiple bankruptcies. A combination of financial setbacks would likely lead people to bankruptcy. One must be aware of some common causes of bankruptcy to avoid getting caught up in one. 

Three common causes for bankruptcy: 

• Unaffordable Mortgage

Home mortgages are one of the enormous portions of household debts. Often, mortgages surpass car loans, student debt, credit cards, and other categories. While many people may want to purchase an expensive house and take bigger mortgages than expected, they would likely encounter a financial setback. 

Financial setbacks, like losing a job or unexpected medical expenses, can occur in many forms. Recently, many standards have been set to reduce bankruptcies related to mortgages. It would be in your best interest to avoid taking up bigger mortgages than you would usually do and prevent yourself from going bankrupt. 

• Loss of income 

Finances stay on track, provided one has a steady and flowing income. However, a study found out that loss of income is the single most common reason behind many bankruptcies. Almost all of us rely on payment from a job or a business. The income helps us in paying bills and managing daily expenses. 

Although, multiple scenarios will be affected and changed if the paycheque stops. Losing a job can also lead one to lose their health insurance. Such instances could make one vulnerable to unexpected medical bills. You should always maintain a savings fund to ensure you are prepared for a period without an income. Savings will always help one to avoid bankruptcy. 

• Medical expenses 

Medical expenses are one of the significant factors in many bankruptcy cases. Unfortunately, medical issues can lead to work loss and stop their income soon. You will be relieved to know that there are specific programs that allow one to stay on their health insurance after they lose their job. A federal law named “COBRA” also allows many laid-off employees to stay on their employer’s insurance plan for a particular time. It would be advisable for you to consult a bankruptcy lawyer in Kingston, New York, to ensure you know the legal standards behind programs like COBRA.