Situations That Leads To The Filing For Bankruptcy

Posted by Nick Niesen on October 29th, 2010

In the financial world, one thing lingers to be perpetually true- that is filing for bankruptcy should always be considered as the last resort. Bankruptcy has become a common word especially in the financial world where many people strive to make the best out of their money in order to have a good quality of living. The image of bankruptcy has grown over for years as a desperate act and as a sign of weakness especially in terms of financial and management standing.

This fact makes bankruptcy a thing to be avoided by many because of its long term effects on the credit-worth of a person filing for it. It is greatly necessary to examine all things thoroughly before considering bankruptcy for it entails a lot of personal and emotional difficulties in the years thereafter.

This false image of bankruptcy is, however, not true to all situations. Though it still remains that declaring bankruptcy ought to be the last thing to enter one?s mind, the impression of it as a reflection of the person?s financial mismanagement is not always true. There are also situations wherein declaring bankruptcy is the solitary viable option of regaining control over huge amounts of debts and mountains of liabilities.

One inevitable reason which may lead a person to apply for bankruptcy amongst thousands of other applicants is the occurrence of financial difficulties brought about by a divorce situation. Statistics show that thirty percent of all bankruptcy applications root from this case because most often than not, after a divorce challenge, all the liabilities becomes halved between the two petitioners making their financial life a lot harder than their married state. Unpaid bills and credit cards with towering interest rate is a primary cause of the mountainous debt accumulated over the years. When this happens and the person finds no single alternative in remedying the situation, applying for bankruptcy is already a considerable option.

Another compelling situation which one can experience is the rise of bills with regards to an unexpected hospitalization and medical services. Although some have insurances for medical endeavors, there are times when the payments to be made are not covered by insurances or even if covered, the bills have already exceeded the limitations for medical support. This scenario leads to a very saddening and challenging life full of debts and interests due to unpaid bills in hospitalization. In this case, bankruptcy becomes the only way to resolve it.

Also, a common case which covers about ten percent of all bankruptcy applicants is the unpaid credit cards and student loans of those enrolled in college. People who are faced with mounting credit card bills coming from many credit companies will find the situation very daunting. If no extra income source can be found immediately, there is no way out but to declare personal bankruptcy.

Bad business venture, sales flop, new product launching or collection problems can truly damage the cash flow of a business. This has not spared even the biggest multi billion corporations. Such situation can render executives insolvent and thus file for bankruptcy.

Although bankruptcy can become a very hard strife for a person lacking financial resources, there are available services which can offer help for a person to recover and regain control his financial predicament.