Over the years I have heard various reasons why people find themselves in need of going bankrupt, and while this is not meant to be a complete list, these are a few of the main reasons/events, that has caused people to need to be bankrupt.

Major Change in Income/Wages: for many people this is an event that is beyond their control.

A person may be made redundant, or lose their job through whatever means, possibly through poor health; for whatever reason, this means they can no longer continue to not just service their debts, but also in some instances they may struggle with affording the basics of life.

Getting Married or Moving in Together: this is a happy and romantic time, but for some, not that well thought out.

Having a huge wedding on credit and/or finding yourselves starting out in debt, buying rings on time, etc. It is the beginning of love and life, and maybe a life of debt.

Often times people get married or move in together without even sitting own to sort out their finances and see who may owe what and who will pay what bills when they live together.

This can be important if one of the partners has a lot of debt to service, also it is important to sort matters out if one person owns property or has substantial assets.

Buying a House or Property: for many this is looked at as good debt, or an investment, and it can be, but if you are not prepared for the costs associated with owning property, or try to have it all done too quickly, you can find yourself in a pickle.

Some people over extend themselves in the monthly mortgage payments, some remortgage to get cash out and find the new payments too high, and some just use other credit means, such as credit cards, to furnish and make their new home a great place to live.

LIving Beyond Their Means: this may seem like a catch-all, but it isn’t really.

People can fall prey to how easy it was to get credit a few years ago, not so much now. So if you were not that educated in the costs of using credit, or just were pain silly with the use of it, you could find yourself in thousands of pounds of debt.

It may have been with trying to have the big-screen TV’s and fancy toys and trappings, or it may have been using credit to make-up for a low wage and using credit to subsidize a lifestyle.

Having Children: such a blessed event, and having children of my own, they are a joy, and also a huge expense.

I am not going to get into what it costs the average person to raise a child from birth to age 18 or 21, but it is not cheap. And for some, not a planned expense. So once the additional costs are fully realised, many people may look to credit cards and credit to help with these costs.

Starting Their Own Business: everyone wants to be their own boss, and rule the roost.

The majority of new business fail within the first few years, many within two (2) years. So not good odds.

Many business, when credit was easy to get, were hedging and borrowing themselves further and further in debt, just thinking they could pull it off on one big contract or in just a few years it would turn around.

Some business owners just bleed their own company dry. They think they are the boss and deserve the big wage they are paid, after all it is their company.

The fact is as a business owner, you should not be paid a wage until all expenses and debts, operating costs, etc are paid; as an owner, you get paid out of the profits.

So for those with the entrepreneur spirit, we need to aware of these pitfalls.

So while not meant to be all inclusive, you can see some of the major catalysts for someone finding themselves in a financial difficult position.