Bankruptcy is the humiliation of the highest distinction, after all. A person who experiences it feels terrible and believes their life has been a failure.
Therefore, you must be aware of the most frequent causes of this unfortunate event if you intend to avoid it to live a joyful and stress-free life and avoid committing these blunders. Below are the most frequent causes that lead to bankruptcy, as reported by William Schantz.
Factors That Lead To Bankruptcy As per William Schantz
Losing Your Job
A sudden absence of income results in you being unable to pay your bills and debts, which might put you in bankruptcy; William Schantz still thinks it is one of the most important factors that lead to bankruptcy. Therefore, if you wish to prevent this tragedy, you should organize your tasks, put in a lot of effort, and always be prepared with a backup plan.
Sole reliance on one income source is also an error because it puts you closer to bankruptcy. To be safe, one must diversify their sources of income and make contingency plans.
Insufficient Insurance Protection
If you don’t have health insurance, even a quick trip to the hospital could result in a bill that won’t go away for years or, in the most extreme case, forever. This explains why one of the main causes of bankruptcy is a lack of insurance coverage. Obtain insurance right away to prevent this catastrophe.
Ineffective Financial Management
According to William Schantz, a significant contributing cause of bankruptcy in states is poor financial management. Anyone can have student loan debt when they start their first job, so they should concentrate on paying it off first. Then consider obtaining a mortgage for a home, getting hitched, or going on a dream vacation.
Unwise Financial Choices, As Per William Schantz
Undoubtedly, a new car looks great. Although purchasing a vacation property is groovy, the main concern is whether you are able to fund it. And even though you could, do you actually need it? Therefore William Schantz claims that making poor financial decisions is the least common cause of bankruptcy. Make sensible choices to prevent suffering from that outcome.
Tragic accidents like a house catching on fire, the automobile being totaled, or even experiencing an uninsured natural catastrophe are three examples of unplanned expenses that can put you out of business.
Significant Salary Reduction While Keeping The Same Standard Of Living
It is a recipe for disaster if you choose to risk bankruptcy if your earnings drop—as happened for several individuals during the pandemic—but you won’t reduce the spending. To take precautions, William Schantz advises that you constantly manage your money well.
Final Words By William Schantz
The road to bankruptcy is steep, so one must always avoid it in any case. Here William Schantz has listed some common human errors that can be avoided to reduce the chances that lead to bankruptcy. Financial management and making sensible career choices allow one to avoid such dire situations.