The threat of bankruptcy cannot be ignored or underestimated. Statistics show that the number of Americans who have file for bankruptcy has reached more than a million. If you think that you will never be in a situation where you have to declare bankruptcy, you could be mistaken.
Even if you’re enjoying financial prosperity today, you can never tell what will happen in the future. Many circumstances that are beyond our control can lead to bankruptcy such as an unexpected illness in the family or divorce. Natural disasters like hurricane, earthquake, or accidents can happen at the most unexpected times and leave one financially unstable.
The recent change economic recession left many people homeless and bankrupt. Other effects include sudden loss of job, failed business, reduced income rate, unemployment, etc. Indeed, all these are unwelcome changes in life that can have a huge impact on a person’s financial stability.
Are you prepared just in case you are confronted with a financial emergency? Surprisingly, despite the reminders we hear, some of us may not pay attention or refuse to take the necessary steps. For instance, do you have an emergency fund that can support you and your family for at least six months, in case you lose your job?
Sometimes, the decisions we make can have serious effects in our life. For example, many people were forced to file for bankruptcy as a result of gambling addiction. These people lost their savings, their homes and their properties because of gambling and ultimately the only option left is to file for bankruptcy.
Some people wanted to start a business but because of lack of preparations, they may find themselves in a very difficult situation, and forced to shut down business. Yes, making a wrong investment can also lead to a bankruptcy situation.
Fighting the Threat of Bankruptcy
The New Bankruptcy Law took effect in October of 2005and under the new law, anyone who wants to file for bankruptcy must first complete credit counseling with a government approved counseling agency at least six months prior to application. Through counseling, you can get proper guidance on what to do during times of financial crisis.
Clearly, there is something people can do to avoid bankruptcy. But the most important thing of all is to be prepared, especially while the situation is still agreeable. If you are presently employed, make sure that at least 10% of your monthly salary goes to your savings account. Aside from your savings in the bank, it’s also recommended to build your personal emergency fund that is easily within reach during times of emergencies.
About the Author
Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. NHBS also has a list of recommended Credit Cards for Bad Credit