Personal bankruptcy is never the ideal predicament to be in, however many people find relief in addressing their financial troubles and starting over. Nobody is perfect, and people make mistakes. Yet too many individuals avoid filing for bankruptcy for far too long. They would prefer to ignore the elephant in the room and spend many years fighting just to make ends meet. Yes, bankruptcy is never pleasant and lots of individuals find it embarrassing, nonetheless it is the very first step towards financial freedom. Always keep in mind that there is a life after bankruptcy.
If you’re struggling financially and considering bankruptcy, it’s useful to recognise the warning signs. Here are a few signs that you’re in serious financial distress.
Making minimum repayments only
One of the clearest signs of financial troubles is when you can only afford the minimum repayments on your loans, yet your source of income isn’t increasing. Interest charges and fees will soon force you to make a change, either by getting a second job or consolidating your loans. And if you don’t make a change, something must give eventually. Of course, it’s fine to have a balance on your credit card debt for a few months, but it’s critical that you think long-term. If you’re sinking in interest charges and can only afford to make the minimum repayments, it’s time to make a change.
If you’re living paycheck to paycheck and realise that your savings are being used to make repayments on your loans, you’re heading for trouble. Most financial advisors recommend having three to six months of living expenses in a specialised savings account. This account should cover all of your expenses for that period: rent, food, transport, bills. What would happen if you lose your job? Or cannot work because of sickness? And if you’re purchasing luxury items while you have high interest loans remaining, you should really get your priorities straight. Without having three to six months of living expenses in your bank account, personal insolvency may well become a reality.
Using credit cards to pay your bills.
Credit Cards are a practical way to purchase items by giving yourself a short-term loan, especially in today’s cashless society. Usually, there is an interest-free period of a month or two, but after this time, the interest rates and fees are particularly high. If you are using credit cards to pay for bills due to the fact that you simply don’t have enough savings, you’re on the brink of disaster. Some people will even have numerous credit cards so they can repay one with another. This is a key sign that you’re heading for personal bankruptcy. Credit cards can be considerably dangerous if used incorrectly. Paying bills with debt only leads to more debt, with big interest charges added on. If this sounds familiar, seek professional advice immediately.
Debt collectors are phoning you
It may seem to be obvious, but if debt collectors are continually hassling you on the phone or in the mail, you should contemplate bankruptcy help. Think about it this way; lenders who believe that they aren’t able to recuperate their loan from you will sell your debt at a reduced rate to debt collectors. If creditors have lost faith in your ability to pay your bills, there is undoubtedly a problem. If you’re frightened to answer the phone or open your mail due to debt collectors, it’s time to take action. You can only brush off those threatening phone calls and letters for so long before your quality of life starts to disintegrate. Pick up the phone and call the professionals, that’s what they’re there for.
Are you so stressed about your financial future that you can’t sleep at night? This is possibly the greatest warning sign that you’re heading for bankruptcy. When your health and happiness are declining because of your financial condition, it’s time to recognise that you need help simply to improve your quality of life. Bankruptcy is not the end of the world, and is, literally, the first step towards financial freedom. Consult with a bankruptcy expert to discover what options you have.
If you’re experiencing any of these warning signs, chances are that you’re actively in financial distress and are heading towards bankruptcy if changes aren’t made. Personal insolvency is the final step in a long process, and normally there are options before you need file for bankruptcy. To find out what options you have, or to speak to someone about your situation, contact Bankruptcy Experts Coffs Harbour on 1300 795 575 or visit http://www.bankruptcyexpertscoffsharbour.com.au