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Top 10 Reasons for Bankruptcy

Last week we talked about what the average bankrupt Canadian looks like. After a survey was completed by bankruptcy trustees Hoyes, Michalos & Associates, it was found that that’s a 43-year-old man that owes more than $60,000 in non-mortgage debt. But of course, bankruptcy does not discriminate by age, gender, or any other factor, and it can hit just about anyone if they’re not careful. So aside from looking at debt and physical features, how else can you tell if you may be at risk for going bankrupt?

Below are the top ten reasons why people filed for bankruptcy in 2011, according to the Office of the Superintendent of Bankruptcy. Of course, falling into one of these categories doesn’t necessarily mean that you’re going to go bankrupt either. But if you fall into three, four, or more, you may want to be especially careful with your household budget.

 

As you can see from the chart above, some of these are obvious reasons for financial concern in your life. If your business fails, you suddenly lose your job, or you’ve taken on way more debt than you can afford, it will force you to evaluate your financial situation. But what about those other categories in there? A failure to pay taxes? A gambling problem?

These technically could probably be filed under the “money mismanagement” category, as they simply represent the fact that a person is either handling their money poorly, or they simply don’t have enough to cover the necessities, such as their taxes.

Again, none of these categories on their own indicate that a person is headed for certain bankruptcy. However, having a few of them present in your life could indicate that there’s a much bigger problem lurking just down the road. When that’s the case, often speaking to a licensed trustee of bankruptcy before financial disaster strikes can be a good option. They can help you come up with a plan to help you avoid bankruptcy and get your financial life back on track.

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