How would you bankrupt yourself? You’d want to get yourself into a position where you could not pay off your debts. You’d run up big credit card bills. You’d borrow heavily. You’d mortgage and re-mortgage your house. You’d splurge on your spending. The money would go – to clothes, restaurants, and hairdressers.
While you were on your spending spree, you might run down your savings and assets. You might travel to Las Vegas and drop a few thousands at the tables. Or you might make bad investments. Buy a stock for $190 and hold it until it is worth a few pennies. Your income from your job is a big asset. It would help the cause if you lost your job.
You’d buy everything in sight using borrowed money. You’d live beyond your means, spending way more than your income. You’d run through your assets and you’d lower your sources of income.
The recipe for going bankrupt is Borrow, Spend, and Run Down One’s Assets.
When you no longer had enough cash flow to make the interest payments that are coming due, you’d go bankrupt.