Personal bankruptcy is never the preferred situation to be in, however lots of individuals find relief in confronting their financial issues and starting over. No one is perfect, and people make mistakes. But too many individuals put off filing for bankruptcy for far too long. They prefer to ignore the elephant in the room and spend years fighting just to make ends meet. Yes, bankruptcy is never pleasurable and lots of people find it embarrassing, 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 contemplating bankruptcy, it’s necessary to understand the warning signs. Here are a couple of signs that you’re in serious financial distress.
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 working a second job or consolidating your loans. And if you don’t make a change, something must give at some time. Needless to say, it’s fine 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 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 specialised bank account. This account should cover all of your expenses for that period of time: rent, food, petrol, bills. What would happen if you lose your job? Or you cannot 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 buy items by giving yourself a short-term loan, especially in today’s cashless world. Often, there is an interest-free period of a month or two, but after this time, the interest rates and charges are particularly high. If you are using credit cards to pay for bills considering that you simply don’t have enough funds, you’re on the brink of disaster. Some people will even have various credit cards so they can pay off one with another. This is a key sign that you’re looking at personal bankruptcy. Credit cards can be rather dangerous if used incorrectly. Paying bills with debt only creates more debt, with big interest charges added on. If this sounds familiar, seek professional advice immediately.
Debt collectors are getting in touch with you
It may appear obvious, but if debt collectors are continuously hassling you on the phone or in the mail, you should contemplate bankruptcy help. Visualise it this way; lenders who believe that they can’t recuperate their money from you will sell your debt at a reduced rate to debt collectors. If creditors have lost faith in your capability to pay your bills, there is certainly a problem. If you’re frightened to answer the phone or open your mail because of 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 suffer. Pick up the phone and call the professionals, that’s what they’re there for.
Are you so distressed about your financial future that you can’t sleep at night? This is probably the greatest warning sign that you’re moving towards bankruptcy. When your health and happiness are disintegrating because of your financial situation, it’s time to accept 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. Talk to a bankruptcy expert to identify what options you have.
If you’re encountering any of the above warning signs, chances are that you’re already in financial hardship and are heading towards bankruptcy if changes aren’t made. Personal insolvency is the final step in a long process, and usually there are options before you need file for bankruptcy. To find out what options you have, or to speak to someone about your financial condition, contact Bankruptcy Advice on 1300 879 867 or visit http://www.bankruptcy-advice.com.au