We have heard way too many people say that they had no idea how they suddenly got into so much debt or how they were fine a day before but were now considered insolvent. The thing is that nobody faces sudden personal insolvency, it builds over time and the person responsible always know about it but they just choose to ignore till the last moment. Since we see people in humongous debt every day, we thought that wee would write this article and highlight what causes personal insolvency so that people can read about the causes and try to rectify their mistake in order to avoid personal insolvency.
Before we do so, our readers should know that personal insolvency is basically when an individual becomes insolvent i.e. that he/she becomes unable to pay back what he/she owes to his/her creditors and that was the simplest way of explaining it but if you wish to know the legal definition of it then you can always search up about it online but for now, let us look at the causes of personal insolvency.
The biggest factor that leads to personal insolvency is that when financial issues begin they just ignore them and continue on with their expenses and never cut back. When you ask bankrupt people how everything happened, they would always tell you ‘I hid bills under my bed’.
Loss of Income
In today’s world, we all know that the economy is pretty bad and people keep losing their jobs suddenly which eventually leads to them being in a lot of debt.
It is a major cause of insolvency where people just do not know how to stop and they spend so much on things that they end up in debt.