Bankruptcy Barometer - 5 Signs You're Headed for Bankruptcy
Going bankrupt is no laughing matter. It affects everything from your ability to gain employment, to your chances of getting a cell phone contract.
It isn’t inevitable though, even if you’ve gotten yourself into a monumental mess. You can turn the tides on financial ruin and get out of debt, if you’re willing to pay attention to and mitigate these strong signs that show you’re heading for bankruptcy:
1. You’re Not Keeping Up with Repayments
If you cannot even meet minimum repayments on your debts, this is a sign that you’re losing the ability to keep your head above water.
Stopping the problem here can be avoided in many ways, including:
- Facing up to the problem
- Gaining extra income
- Appealing to your creditors for more manageable repayment plans
- Consolidating your debts
- Strict and honest budgeting
There’s no need to let things spiral out of control, but the first step is facing up to the truth.
2. You Have Taken Out Home Equity to Pay Off Debt Without Success
If you have borrowed the equity in your home you may have seen some temporary financial relief. Huge debts can be paid off, leading to freedom, right? Sadly, this isn’t always the case.
If you don’t pay everything off with an equity loan, you risk having your debt mount up again, resulting in you losing your property and being forced to file for bankruptcy.
The lesson you can learn before this happens, is to only take out a home equity loan if you know the amount will be used to pay off bigger debts in full.
3. You’ve No Where Else to Borrow From
If your credit cards have been maxed out, your bank won’t give you any more overdrafts, and you’ve even borrowed from friends and family, you’re out of options. At this stage, bankruptcy can help you prevent things from getting even worse.
To avoid this, you need to be honest with yourself about your situation the first time you max out your credit card for basics like food, fuel, and accommodation.
4. The Smallest Extra Expense Is the Straw That Breaks the Camel's Back
If small expenses like repairing appliances or incurring a fine push things over the edge financially, that is a clear sign the future could hold bankruptcy for you. You’re one of the 3 in 10 Americans with no rainy day fund, leaving you in a financially precarious position.
If you know you’re living hand to mouth now, it’s a good time to change things before you’re in over your head.
5. You’re Using Loan Sharks, Payday Loans & Other Risky Borrowing Options
12 million Americans use payday loans every single year. Sadly, these lenders are known for being unforgiving, and borrowers can quickly find themselves owing more money than they took in the first place due to the excessive interest rates.
If your debt has gotten to such a point that you’re resorting to these types of lenders, you’re on a road to bankruptcy. Even thinking about getting a payday loan should be a warning sign that now is the time to change how you handle your current finances to move towards a better future.
Bankruptcy is sometimes the best option for a person who has no other way to go. However, there are many, many options before that point that can help you work towards a better outcome. Seek professional advice now to create a better financial future for yourself.
