4 Most Common Causes For Foreclosures
According to statistics, despite the country making a slow and steady economic comeback, millions of Americans face foreclosure. Regardless of where you live, how much you make, or what your ethnic background is, foreclosure can strike anyone.
Most people who are facing foreclosure never thought they’d see themselves in that position. Some people don’t even see it coming until it’s too late. Here are some of the most common reasons why people fall behind on their payments, which cause people to go into foreclosure.
Medical Bills
Surveys show that over half of all bankruptcies are a result of Americans who are unable to pay for their health expenses. Over three-quarters of this number of Americans were insured, debunking the false conclusion that only uninsured people fall into crippling medical-related debt.
A simple trip to the doctor is one thing, and finding yourself with a sudden rare or life-threatening disease is another. A few appointments with specialists can quickly run your money reserve dry and lead to a stack of unplayable bills. The result? People having to make the impossible choice between paying their mortgage and paying for their health.
Loss of Employment
Thousands of people lose their jobs every few minutes due to unforeseen circumstances. The reasons can vary from being a result of an injury at work to being wrongfully terminated. Regardless of why an employee loses their job, the result is still the same: no income. While some people may be able to count on a severance package, not everyone is so lucky.
With bills to pay and families to feed, jobless people can quickly find themselves depending on credit cards to pay bills. As their debt snowballs, so does their inability to pay their mortgage. Over time, the bank eventually repossesses their home.
Divorce
Up there with the other top causes of foreclosure sits divorce. Divorce isn’t only mentally and emotionally taxing, but it’s also literally taxing. The cost of lawyers and splitting assets can be detrimental to people’s bank accounts. The costs of having to pay for two separate households on top of their shared mortgage becomes a financial nightmare.
Disasters
In many cases, people lose their homes and belongings as a result of theft or natural disasters. Unfortunately, if they didn’t take out special insurance coverage for these types of disasters, they can find themselves liable for the entire loss, thus resulting in going completely bankrupt. Not only do they have to cover their losses, but they also figure out how they’re going to put food on the table and where they’ll sleep.
By identifying the most common reasons for financial disasters such as foreclosures, you will be less likely to fall into the same catastrophe. By applying the right habits and avoiding making money blunders, you can increase your chances of avoiding dreaded foreclosure.