You’ve always struggled to manage debt. It’s been one of the major stressors in your life and, while you understand that in some cases, debt is necessary, you often feel like you’re barely staying afloat.
You’re not alone. It’s a stressful way to live, but it’s a reality for many people in Ohio and across the U.S. When you live paycheck to paycheck, you don’t have much wiggle room and one minor financial slip can create financial burdens that are difficult to overcome.
So, why do things go wrong? When the worst-case scenario finally comes true, debt become overwhelming and creditors may start threatening to garnish your wages and repossess your car or home. While financial problems can escalate quickly, there are usually warning signs that things are about to take a turn for the worse. In many cases, you can see the signs in advance and start planning. Below are common scenarios that often lead to financial burdens.
Losing a job or losing income
Your job feels stable and you are accustomed to a certain income level. However, business decisions often warrant cutbacks which may translate to pay cuts and job losses. These are two of the main causes of bankruptcy and foreclosure in the United States. Unfortunately, many employees forget how fragile their careers are and the debt that you can barely afford now becomes exponentially more difficult to manage when your income is reduced.
Another way for your budget to be completely derailed is when you accrue medical debt. It’s one thing to buy a home that you can barely afford or to rack up debt intentionally on your credit cards. You may start skating on thin ice, but at least you know that you chose it. You can plan for it. When medical emergencies happen, debt can balloon literally overnight.
The end of a marriage
Divorce also drives people to financial extremes. Two incomes drop down to one. Half of your savings disappear. You must suddenly pay child support. Maybe your mortgage technically consumes 50 percent of your income, but you bought a house because your spouse’s income helped cover the rest of your bills. Without that second income, how long can you realistically keep your home or afford to pay rent on another house?
Dealing with bankruptcy and foreclosure
Understanding why foreclosure happens is only half of the battle. You also need to know the legal options that are available to you and what you can do to overcome debt and get your finances in order.