Over the years helping people we have seen numerous causes of people getting into debt. When we look closer at each case, they tend to be catagorised into the following 4 main reasons people get into debt:
1. Illness – the loss of income from a long term illness can be loss of the sick partner, plus the loss of partial income from the remaining bread winner. Illness can cause the most devastating financial issues because there could be long term inability to recover financially.
2. Business Failure – depending on the type of business, the amount of credit, and the reasons behind the failure, the severity of the debt issue can vary considerably. ; such as On closure or winding up of a business all debts need to be paid for such as overdrafts, credit cards, car and equipment finance, trade creditors, taxes. Banking facilities can generally remain so long as payments are made, however trade accounts can usually be difficult to meet as these usually require a lump sum payment.
3. Divorce & Relationship Break up – Amicable break ups where two parties discuss their debts can end with clear strategies to moving on. However, emotions can get in the way with the breakdowns in the relationship. The result can be credit cards, car loans, and mortgages not being paid.
4. Loss of Job – The financial impact is determined by the amount of debt, what payments are made, the length of unemployment and the new income once back into employment.
In all cases above, the faster an income is re-established and payments made against the debts the better the chances of sourcing finance for a Debt Consolidation The other factor to keep in mind is communication with your creditors and lenders as there are avenues for various forms of hardship to obtain adjustments to their credit contracts. Business credit may not qualify for hardship however it is still advisable to keep in communication with your trade a creditors.