Do you know the warning signs of bankruptcy? It is common for many of us to get off track with our finances at least once in our lives. Many of us have good intentions to stick to our budgets, but an unexpected illness or car payment can appear, and money becomes a little tighter. Perhaps you even use credit cards in the interim just to get by. However, if you continue this pattern, it can lead you down the road of financial distress and possibly filing for bankruptcy.
Here are eight red flags that could indicate you might be steering your way toward filing for bankruptcy:
You’re Missing Payments or Not Paying on Time – This is one of the most obvious signs. If you can’t pay bills when they come in, your debt may be on the more excessive side. This is particularly worrisome if you’re consistently struggling to pay your mortgage or car payments on time.
You Struggle to Make Minimum Credit Card Payments – When you make minimum payments on your credit cards, you are keeping yourself from being charged late fees. If you are unable to handle paying the minimum monthly payments, this could be a sign that you are headed toward serious financial problems, and it may also take you much longer to get yourself out of debt.
You Use Credit Cards to Make Payments – If you find yourself doing this, you’re just piling debt on top of debt (unless you transfer all of your balance to a 0% interest balance transfer card, which could work in your favor in reaching a debt-free life). Otherwise, this is a big sign that you could be headed toward becoming insolvent.
You’ve Maxed Out Your Credit Cards – Once you have hit the maximum allowable balances on your credit cards, you will be unable to increase your credit amounts and will be unable to gain approval for additional loans. This is what we would call a key bankruptcy tipping point.
You’re Taking Money Out of Your Savings or Retirement – When you drain your savings or retirement funds to help pay the bills, you are putting yourself more at risk for encountering a situation in which your only option would be to add even more debt onto your credit cards. If you’re sacrificing the future for the present, this could be a sign that filing for bankruptcy could be on the horizon for you. See a bankruptcy lawyer before you spend retirement dollars to pay bills. A good lawyer will have other options for you that will protect and save your retirement funds.
You’re Starting to Use High-Cost Loans – It’s bad enough to have to use credit cards to fill in the gaps short-term for purchasing gas or groceries; however, using payday loans or vehicle-title loans can be much worse. Several of these loans have very high interest rates, and you can easily find yourself lost within a seemingly interminable cycle of debt.
You’re Constantly Juggling Bills – This might work for you in the short term, but in time, you will wind up exhausting yourself and your funds. When you’re shuffling bills to pay off the minimum on the most prominent ones, you’re essentially putting off the inevitable, costing yourself more money, and damaging your credit score.
You’re Unable to Recover from a Major Financial Setback – According to a study from the Financial Industry Regulatory Authority (FINRA), 2 in 5 Americans are unable to come up with $2,000 within a month. If you happen to be one of these and are hit with a large medical bill, job loss, or other financial shock, it can easily push you toward needing to file bankruptcy.
If you happen to see some of these warning signs, don’t panic. It just means that it’s time to come up with a solid financial plan to help you get back on track. Filing for bankruptcy may be part of that plan. If that’s the case, don’t hesitate to call The Bankruptcy Advocates at (618) 549-9800. We can guide you through the entire process and help you gain control of your life once again!