There is hardly anyone in the world that does not face a financial crisis at one point or another in their lives. Unless you were born a millionaire and have a stellar team managing your finances, you may find yourself caught up in the debt spiral.
The good thing is that financial crisis does not come unannounced. There are warning signs and signals that essentially point towards a possible downturn in your finances. While most people tend to ignore them, the smarter ones identify them, take a step back and reevaluate their spending habits to change the course of their finances.
We’d like you to be smart about it too. If you are going through any of the following, you might just be on the road to bankruptcy.
Exceeding Credit Card Limits
Probably the strongest sign of a possible bankruptcy situation in the future is the overcharging of credit cards. This means you are paying your bills/expenses through the credit card exceeding the amount you can actually pay back on a monthly basis. For example: you have a monthly income of $ 10,000. You however, are making transactions worth $12,000 every month. The $2,000 extra that you’re spending is only adding up to your debt and the consequent interest as well!
Maxing Out on Contingency Funds
People maintain contingency funds for emergencies. If you have been using these funds to pay out your existing debts and/or the utility bills you most probably are running on a negative bank balance. This is not good! Maxing out on your contingency funds is an obvious indication of the fact that you are unable to manage your current money situation – and trust us when we say, it’s not going to get any better!
Bad Credit Ratings
Your credit ratings determine your worthiness to obtain a personal loan. In case you can’t make any of the lenders to agree on giving you a loan to cover your existing loan payments, you’re quite likely to have a bad credit rating. Credit ratings are affected by the number of loans you have taken and the time you take to repay them. If you have been defaulting on most of your existing loans, your credit rating isn’t of much help to you.
Sued By the Creditors
Have you been having a hard time paying back your debts on time? Are your creditors after you for their money? According to the law, they reserve the right to sue you for the payment of their outstanding amounts. They can take you to the court to declare bankruptcy and this may mean you standing to lose every material thing that belongs to you. Take our advice; consult someone for effective debt relief solutions.
These signs can help you identify your current situation and take preventive measures to overcome it. Often people think declaring bankruptcy is the only solution they have for getting rid of their piles of debt. That’s not true. There are several debt management channels that you could pursue to get you out of the financial crises you’ve called upon yourself. Declaring bankruptcy under Chapter 7 can be your last resort – and this will require expert legal counsel.