Personal bankruptcy is never the preferred predicament to be in, however lots of people find relief in dealing with their financial problems and starting afresh. No one is perfect, and people make mistakes. But a lot of individuals avoid filing for bankruptcy for far too long. They choose to ignore the elephant in the room and spend years struggling just to make ends meet. Yes, bankruptcy is never appealing and lots of people find it humiliating, 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 into bankruptcy, it’s important to acknowledge the warning signs. Here are a few 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 income isn’t increasing. Interest charges and fees will quickly 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 at some point. Obviously, 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 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 find that your savings are being used to make repayments on your loans, you’re heading for trouble. Most financial advisors advise having three to six months of living expenses in a dedicated savings account. This account should cover all of your expenses for that period: rent, food, transport, bills. What happens if you lose your job? Or you cannot work due to sickness? 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 bank account, personal insolvency may well become a reality.
Using credit cards to pay your bills.
Credit Cards are a convenient way to purchase items by giving yourself a short-term loan, particularly in today’s cashless world. Commonly, there is an interest-free period of a month or two, but after this time, the interest rates and fees are incredibly high. If you are using credit cards to pay for bills due to the fact that you simply don’t have enough money, you’re on the brink of disaster. Some people will even have a couple of credit cards so they can pay off one with another. This is a key sign that you’re steering towards personal bankruptcy. Credit cards can be really harmful if used wrongfully. Paying bills with debt only generates 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 to be obvious, but if debt collectors are frequently plaguing you on the phone or in the mail, you should contemplate bankruptcy help. Imagine it this way; lenders who believe that they can’t recoup their money 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 scared to answer the phone or check your mail as a result of debt collectors, it’s time to act. You can only dismiss those threatening phone calls and letters for so long before your quality of life begins to languish. Pick up the phone and call the specialists, that’s what they’re there for.
Are you so troubled about your financial future that you can’t sleep at night? This is likely the most significant warning sign that you’re steering towards bankruptcy. When your health and happiness are disintegrating due to your financial circumstances, 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 find out what options you have.
If you’re encountering any of these warning signs, chances are that you’re actively in financial trouble 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 speak with someone about your circumstances, contact Bankruptcy Advice Perth on 1300 879 867 or visit https://www.bankruptcy-advice.com.au/perth