Personal bankruptcy is never the preferred situation to be in, however many people find relief in dealing with their financial troubles and starting afresh. No one is perfect, and people make mistakes. Yet a lot of people hold off filing for bankruptcy for far too long. They choose to ignore the elephant in the room and spend many years struggling just to make ends meet. Yes, bankruptcy is never pleasing and lots of people find it humiliating, nonetheless it is the very first step towards financial freedom. Always remember that there is a life after bankruptcy.
If you’re struggling financially and looking into bankruptcy, it’s useful to identify the warning signs. Here are a number of signs that you’re in serious financial trouble.
Making minimum repayments only
One of the clearest signs of financial complications is when you can only afford the minimum repayments on your loans, yet your salary isn’t increasing. Interest charges and fees will eventually force you to make a change, either by finding a second job or consolidating your loans. And if you don’t make a change, something must give at some point. Obviously, it’s okay to have a balance on your credit card debt for a few months, but it’s important that you think long-term. If you’re drowning 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. A large number of financial specialists recommend having three to six months of living expenses in a dedicated savings account. This account should cover all your expenses for that time frame: rent, food, petrol, bills. What happens if you lose your job? Or can’t work because of sickness? And if you’re buying luxury items while you have high interest loans overdue, you should really get your priorities straight. Without three to six months of living expenses in your savings account, personal insolvency may well become a reality.
Using credit cards to pay your bills
Credit Cards are a practical way to pay for items by giving yourself a short-term loan, especially in today’s cashless world. Generally, 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 since you simply don’t have enough cash, you’re on the brink of disaster. Some people will even have various credit cards so they can repay one with another. This is a key sign that you’re looking at personal bankruptcy. Credit cards can be quite hazardous if used incorrectly. Paying bills with debt only brings about more debt, with big interest charges added on. If this sounds familiar, seek professional advice immediately.
Debt collectors are calling you
It may appear to be obvious, but if debt collectors are repeatedly harassing you on the phone or in the mail, you should look at bankruptcy help. Think about it this way; lenders who feel that they aren’t able to recoup their loan from you will sell your debt at a lower rate to debt collectors. If creditors have lost faith in your ability to pay your bills, there is certainly a problem. If you’re frightened to answer the phone or check your mail due to debt collectors, it’s time to act. You can only overlook those threatening phone calls and letters for so long before your quality of life starts to languish. Pick up the phone and call the professionals, that’s what they’re there for.
Are you so concerned about your financial future that you can’t sleep at night? This is possibly the greatest warning sign that you’re moving towards bankruptcy. When your health and happiness are descending because of your financial situation, it’s time to realise that you need help simply to improve your quality of life. Bankruptcy is not the end of the world, and is, in truth, the first step towards financial freedom. Consult with a bankruptcy expert to identify what options you have.
If you’re experiencing any of the above warning signs, chances are that you’re currently in financial calamity 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 Townsville on 1300 795 575 or visit Declaring Bankruptcy Townsville