Divorce has a devastating impact on most people. It is one of the factors that led to my own bankruptcy. In my case, I had to assume the entire income tax liability for the year that I got divorced. I also had to assume all of the credit card and overdraft debt that my ex had accumulated. The financial pressure was unbelievable – then I lost my job. I had to try to start over dragging an incredible debt load from my past life – with no job. I finally came to my senses, found a good lawyer and filed for Chapter 7 bankruptcy.
In my practice today, I see the strain on everyone’s budget brought on by divorce. You have to try to pay on debts that were accumulated during the marriage and now you both have to pay for separate living expenses. You used to be able to live under one roof – now you need 2.
2. Job Loss or Cut Back.
I see a lot of devastation brought on by job loss and job cut backs. People are losing benefits and overtime everyday. And, quite frankly, the local economy is in the dump.
I have seen more than one client whose income has been cut in half by cut backs or lay offs. They lose a good job paying $50K a year and now they have a job that pays $25 or $30K – without benefits! There expenses are the same – same house payment, same car payment, same credit card payments – and it just becomes impossible to function. They simply can’t keep up with the payments.
3. Illness – Health Issues.
Sudden and unexpected health issues can really create a financial disaster in a hurry. This situation is especially brutal if you lost any health benefits through job cut backs. What can you do? You have to seek medical help and you get stuck with the bill. It gets really expensive in a hurry – and there is no way to factor those payments into your budget.