Every day, thousands file for bankruptcy to get out of a serious debt problem they are facing affecting the persons bank accounts and lives. Causes leading someone to this unfortunate situation are many and here we will attempt highlight some of the more common ones. Regardless of the cause, bankruptcy is go-to solution for a lot of people finding themselves in financial dire straits.
What are the causes of Insolvency Bankruptcy in UAE?
- Medical Expenses
- Sudden Unemployment
- Living beyond your means
- Divorce or Separation
- Unexpected Expenses
1- Medical Expenses
Medical expenses count for a large number of bankruptcy cases due to exorbitant hospital bills or time lost from work owing to serious injury. At times even stellar health insurance cannot protect you from complex disease treatment or expensive operations that can land you several thousands in debt. As last resorts people may dig in to their life savings, home equity or funds put aside for their children’s education in order to keep up with these spiraling medical bills.
When the money runs out bankruptcy maybe the only course of action left for the patient.
2- Sudden Unemployment
2020 has been a very unpredictable period due to Covid-19 seeing millions losing their jobs because of it. Due to these layoffs or advised resignations this sudden loss of income can be extremely devastating.
If no money has been put aside for a rainy day it can very hard. This is because mandatory payments like rent, loans, car payment and education cannot be paid. Once again – Bankruptcy may be your only recourse.
3- Living beyond your means
This one is common and comes about when people cannot keep up with the lifestyle they are trying to live. In time – they cannot afford to pay even the minimum payment requirements for these things. Collecting funds from nearest and dearest buys some time to try repair their situation. However, if all is not rectified by the borrower filing for bankruptcy maybe the only option.
4- Divorce or Separation
Divorce is a big expense to many since one household will now become split in two. This raises expenses exponentially while also affecting incomes for either of both parties. If you co-signed or opened a joint account with your soon-to-be-ex you may still be liable for that debt. Add to all of this exorbitant lawyer fees, the separation of assets, possible child support and the possibility of two households up keeps maybe too much for one to bear.
5- Unexpected Expenses
Significant loss can come about from natural disasters such as floods, earthquakes and floods and having no insurance. Other things such as thefts and fires can also lead to the same result of bankruptcy.
Read more: How Bankruptcy Works in UAE?
Approved Liquidators in UAE
From the information that we’ve given, we here at Farahat & Co recommend that businesses in UAE evaluate the financial position of their companies, devise debt recovery strategies, and formulate credit repayment strategies together with approved UAE liquidators. This may be negotiating short term deferments and increasing length of repayment of debts plans.
When a business is still unable in settling its debts, it is always a good idea to seek legal advice and financial advice from experts on the company liquidation process in Dubai UAE. A seasoned liquidators in Dubai will be able to present you with options in dealing with your specific issues and address your business’ needs and requirements. We are also able to tailor solutions based on your personal preferences.
You may want to know: Reasons behind the liquidation of companies in Dubai
Call us today to book an Initial Consultation with our team on Company Liquidation in Dubai.