What are the primary causes of bankruptcy

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Killen Landau & Associates Ltd, with over 22 years experience in this industry, understands the difficulties that honest people can sometimes find themselves in. For more information on their services, visit http://killenlandau.ca/. They are located at 2060 Lawrence Avenue East Scarborough, ON M1R 2Z5‎ (416) 285-9511.

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  • What are the primary causes of bankruptcy

    1. 1. What Are the Primary Causes of Bankruptcy?
    2. 2. Bankruptcy is a touchy subject for anyone who has had to file inthe past, or is looking at that option in the present. While it reallyisn’t the end of the world, it’s definitely something you should try toavoid if possible.Of course, bankruptcy doesn’t just happen for no reason. Thereare some common causes that result in bankruptcy being the onlylogical way out.
    3. 3. What Is Bankruptcy?Bankruptcy refers to a formal legal process where people are ableto find relief from their debts and start over again. It includes filinglegal papers with the help of a bankruptcy trustee, and you areeligible for discharge after nine months.Bankruptcy erases unsecured debts such as credit cards, personalloans and credit lines, but not secured debt such as car loans ormortgages.
    4. 4. Basic Bankruptcy ProcessIf you feel that you are a candidate or have no option but to file forbankruptcy, the process begins with an initial assessment from abankruptcy trustee.Sometimes, the trustee will advise that bankruptcy is not the onlyoption, and that a different course of action may be moreappropriate. If it is decided that bankruptcy is a good option, youmust tell your trustee:• How much you owe and to whom• How many assets you have and their value
    5. 5. Process cont…• How many assets you disposed of in the past year• How much you earnYou must also:• Hand over credit cards• Place your assets in the trustee’s control• Attend all required meetings or counseling sessions• Make any payments to the trustee during bankruptcy
    6. 6. The ResultsThe results of filing for bankruptcy are typically a mix of good andbad.• Creditors can’t contact you anymore• No one can sue or garnish your wages• Credit bureau will report the bankruptcy for 7 years• Can often keep your house or car if you continue makingpayments• Your spouse should not be affected• Employers aren’t notified• Co-signers are not relieved of their obligations
    7. 7. Primary Causes of BankruptcyBankruptcy may have any number of root causes depending oneach individual case, but there are some main issues that comeare behind it that keep coming up over and over.In Canada, the top three causes of bankruptcy include:• Job Loss - when you are employed and things look bright, it’seasy to take on more debt than you really should. However, ifsomething happens to remove that income from the equation,financial disaster might be soon to follow.
    8. 8. More Causes•Separation or Divorce - In Canada, almost one-third of all thepeople who file for bankruptcy are either separated or divorcedwhen filing.The financial burden that follows a separation or divorce is oftentoo much for just one income. In most cases, the bulk of monthlybills are doubled as each person finds their own place, yet theoverall income is the same.
    9. 9. Causes cont…•Illness and other Medical Problems - even though primary medicalcare is taken care of in Canada, being sick or incapacitated for anylength of time still makes it difficult or impossible to earn money.For anyone without sufficient insurance or employee benefits, thebills can add up in a hurry,and sometimes the only logical solutionis to file for bankruptcy.
    10. 10. Leading Cause in AmericaIn the United States, where medical expenses are not covered inthe same way, they are the leading cause of bankruptcy filing.According to Clear Bankruptcy, the burden of medical expensesaccounts for 42 percent of bankruptcies in the United States, withjob loss and poor spending habits coming in second and third.
    11. 11. References• Killen Landau & Associates Ltd, with over 22 years experience in this industry, understands the difficulties that honest people can sometimes find themselves in. For more information on their services, visit http://killenlandau.ca/. They are located at 2060 Lawrence Avenue East Scarborough, ON M1R 2Z5‎ (416) 285‎- 95‎11.

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