Personal bankruptcy is never the preferred position to be in, however many individuals find relief in dealing with their financial issues and starting afresh. No one is perfect, and people make mistakes. Yet a lot of men and women hold off filing for bankruptcy for far too long. They would prefer to ignore the elephant in the room and spend several years fighting just to make ends meet. Yes, bankruptcy is never satisfying and lots of individuals find it embarrassing, nevertheless 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 looking at bankruptcy, it’s necessary to understand the warning signs. Here are a few signs that you’re in serious financial hardship.
Making minimum repayments only
One of the clearest signs of financial difficulties is when you can only afford the minimum repayments on your loans, yet your income 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. Surely, it’s okay to have a balance on your credit card debt for a few months, but it’s imperative that you think long-term. If you’re suffocating in interest fees and can only afford to make the minimum repayments, it’s time to make a change.
If you’re living paycheck to paycheck and find that your savings are being used to make repayments on your loans, you’re heading for trouble. A large number of financial experts advise having three to six months of living expenses in a separate bank account. This account should cover all of your expenses for that period: rent, food, transport, bills. What happens if you lose your job? Or can’t work because of a health condition? And if you’re purchasing luxury items while you have high interest loans unsettled, 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 comfortable way to pay for items by giving yourself a short-term loan, especially in today’s cashless world. Typically, there is an interest-free period of a month or two, but after this time, the interest rates and fees are extraordinarily high. If you end up using credit cards to pay for bills since you simply don’t have enough savings, you’re on the brink of disaster. Some people will even have a number of 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 rather destructive if used wrongfully. Paying bills with debt only results in more debt, with big interest charges added on. If this sounds familiar, seek professional advice immediately.
Debt collectors are contacting you
It may seem to be obvious, but if debt collectors are repeatedly harassing you on the phone or in the mail, you should contemplate bankruptcy help. Visualise it this way; creditors who believe that they aren’t able to recoup their loan from you will sell your debt at a lower rate to debt collectors. If lenders have lost faith in your capacity to pay your bills, there is certainly a problem. If you’re scared to answer the phone or open your mail due to debt collectors, it’s time to act. You can only brush off those threatening phone calls and letters for so long before your quality of life begins 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 most probably the biggest warning sign that you’re steering towards bankruptcy. When your health and happiness are diminishing because of your financial position, 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. Speak to a bankruptcy expert to identify what options you have.
If you’re encountering 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 commonly there are options before you need file for bankruptcy. To find out what options you have, or to talk to someone about your financial condition, contact Bankruptcy Experts Northern Rivers on 1300 795 575 or visit http://www.bankruptcyexpertsnorthernrivers.com.au