Question

Which of the following commonly happen prior to a person declaring bankruptcy? (select all that apply)

a) that person's death

b) divorce

c) job loss

d) major illness

Answer 1

Before declaring bankruptcy, common occurrences include divorce, job loss, and major illness, leading to financial distress and inability to repay debts. Option B,C,D are correct.

Step-by-step explanation:

The situations that commonly occur before a person declares bankruptcy include divorce, job loss, and major illness. These life events can lead to financial instability and the inability to pay off debts, pushing an individual towards bankruptcy.

It should be noted that a person's death is not a precursor to their own bankruptcy, as the event of death concludes their financial affairs rather than leads to the legal process of bankruptcy.

Experiencing a job loss can be particularly devastating, as it results in a sudden loss of income, which can quickly deplete savings and force individuals to make drastic changes to their lifestyles, often leading to financial distress.

Major illnesses can cause significant medical expenses and potential loss of income due to an inability to work, adding to financial strain. Divorce can also lead to bankruptcy because it might entail legal costs, division of assets, and potential alimony or child support obligations that exceed an individual's financial capacity.