Three Causes of Bankruptcy, by David
The U.S. is known as a consumer society because, in many ways, the system encourages people to buy. It is easy for people to obtain a credit card and buy, and afterwards pay minimum payments each month. Buying something in U.S is very tempting. Many people lose control buy, and then later they cannot pay the debt. When, people cannot pay the debt to their creditors, a unique option for them is to declare bankruptcy. Bankruptcy is the legal declaration of the person who cannot pay more. This declaration is done by a bankruptcy judge. Each year 1,500,000 begin the process of bankruptcy. There are many causes of bankruptcy, but the three most common causes are irresponsible spending, quitting the job, and high interest rates.
One cause of bankruptcy is irresponsible spending. Many people receive credit cards from stores or banks in their mailboxes. They offer zero interest if they pay within the next year after buying. People are encouraged to buy through printed advertisements, radio, or TV. When people buy and buy, and they do not plan their purchases and spend more than they earn, they have problems paying the credit, and later they need to declare bankruptcy. Buying for the sake of buying it is very dangerous for a family’s budget.
Another cause of bankruptcy is when people quit their job. If you have a debt you quit your job, and you do not find another one quickly, then it almost certain that you will need to declare bankruptcy. For example, many people take out a mortgage to buy their houses and at the time, they have other debts to pay. When people lose their job, they cannot pay the mortgage or their debts. In this case, interest for not paying increases, and after that, the debts are almost unpaid. The sole way for people to escape the debt is for them to declare bankruptcy.
The final cause of bankruptcy is high interest. When you buy with credit, you need to take interest into account. For example, many people buy their houses with high interests; the highest one now is 15.61 %. (This is when you have a bad credit.) If you buy your house for $175,000, at the end you will pay $420,000. When the interest is high, it is almost sure that people cannot pay the debt for some months or years, and then they lose the house and still need to pay the debt. What happens then? Yes, people need to declare bankruptcy.
In conclusion, if you do not want had bankrupt, you must not spend irresponsibly, and not give in to the temptation of advertising to buy. You need to plan your spending every month and look carefully at how much you earn each month. Do not forget to save money in your savings account. You should be ready if you lose your job. As a final point, you need to be aware of interest rates and be sure you pay the interest. Remember, interest does not sleep, does not take vacations, is never sick, and is always working.
One cause of bankruptcy is irresponsible spending. Many people receive credit cards from stores or banks in their mailboxes. They offer zero interest if they pay within the next year after buying. People are encouraged to buy through printed advertisements, radio, or TV. When people buy and buy, and they do not plan their purchases and spend more than they earn, they have problems paying the credit, and later they need to declare bankruptcy. Buying for the sake of buying it is very dangerous for a family’s budget.
Another cause of bankruptcy is when people quit their job. If you have a debt you quit your job, and you do not find another one quickly, then it almost certain that you will need to declare bankruptcy. For example, many people take out a mortgage to buy their houses and at the time, they have other debts to pay. When people lose their job, they cannot pay the mortgage or their debts. In this case, interest for not paying increases, and after that, the debts are almost unpaid. The sole way for people to escape the debt is for them to declare bankruptcy.
The final cause of bankruptcy is high interest. When you buy with credit, you need to take interest into account. For example, many people buy their houses with high interests; the highest one now is 15.61 %. (This is when you have a bad credit.) If you buy your house for $175,000, at the end you will pay $420,000. When the interest is high, it is almost sure that people cannot pay the debt for some months or years, and then they lose the house and still need to pay the debt. What happens then? Yes, people need to declare bankruptcy.
In conclusion, if you do not want had bankrupt, you must not spend irresponsibly, and not give in to the temptation of advertising to buy. You need to plan your spending every month and look carefully at how much you earn each month. Do not forget to save money in your savings account. You should be ready if you lose your job. As a final point, you need to be aware of interest rates and be sure you pay the interest. Remember, interest does not sleep, does not take vacations, is never sick, and is always working.
posted by The Zimmermans at 8:24 PM
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