There are many reasons why people become Debt-ridden. Following are some of the more common reasons:
Diminished income / same expenses
Many times, people do not reduce their expenses to correspond with a decrease in income, and instead, accumulate debt.
Divorce can be very costly, and is likely to cause you to go into debt. In addition to paying thousands of dollars in legal fees, you may be held liable for making payments to your spouse or paying their debts, especially if you were the co-signer on a loan.
People often think that their underemployment is just temporary, and fail to reduce their expenses to coincide with their current income. Eventually, if you realize an increase in income because of additional hours of work, another job, or a higher-paying job, then you can return to your prior level of spending.
Medical bills are a major contributing factor to a rise in debt due to gaps in coverage, and policies that have lapsed. In addition, if you become severely ill, and are without health insurance, you can easily incur thousands of dollars in medical expenses. And even if you have health insurance, you could face high medical bills that you cannot afford to pay.
Insufficient savings or none at all
You will likely incur a great deal of debt if you do not have an emergency savings account with enough funds to pay for expenses for three to six months. If you have such an account, you will be in a better position to endure financial adversity, and a rise in debt in the event of loss of employment, sudden illness, or divorce.
It can be financially devastating to suddenly become unemployed. When people no longer have a source of income, they resort the use of credit cards and loans to pay for everyday living expenses, including food and shelter.
The article above: (1) does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for personalized legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel about your specific matter.
The post Top 6 Reasons People Get into Debt appeared first on McDowell Posternock Apell & Detrick, PC.