When you are on unstable financial ground, it should be pretty obvious to you. There may be several things that may cloud your vision of what is supposed to be a clear picture, leading you now to seek the services of a bankruptcy attorney. Identifying red flags for an impending personal financial crisis is very significant. This may be the only thing that will keep you from having to file for bankruptcy.
Here are a few warning signs to watch out for:
- Your credit card is at its limit. You have maxed it out! When you start using up all available credit, it’s a major sign that you probably cannot afford to maintain it. It is important to use your credit card prudently. At any one time, never use up to 30-40% of your credit limit. This allows for flexibility in case you face some financial hiccups such as a divorce, unemployment, illness and the like. If you max out your credit card, there is definitely something wrong.
- You’re behind on your vehicle or home loan. Your house and car are two of your major investments. The former provides you a place to live in while the latter is used for mobility, a necessity for you to keep running smoothly. If you fail to make timely payments on your car loan or mortgage, or worse if actions such as repossession or foreclosure have been slapped against you, without a doubt, you are on your way to bankruptcy, and you need to seek professional advice.
- You have no contingency fund. We all need to save, whether for retirement, vacation or in cases of emergencies. If you have reached the point where you are not able to set aside an amount off your monthly salary, this may be a red flag that your finances are unstable.
- You’re ‘robbing Peter to pay Paul.’ One warning sign that you are on an unstable financial platform is borrowing from other creditors to make payments on another. A lot of people do some ‘financial magic’ to never miss a payment. How? They take a cash advance from one credit card to pay another. This, however, does not make the situation any better as it only prolongs the inevitable. Eventually, your debts will catch up on you, and you will soon find yourself filing for bankruptcy.
- You can’t provide for your necessities. If you can’t buy the latest gadgets or are not shopping as often as you usually do, that isn’t a problem. But if you can no longer sustain certain essentials such as food, education, home and vehicle repairs and health insurance, you need to pause and evaluate your situation. There is a problem.
- Creditors are on your tail. Once your creditors are calling, sending letters or have already sued you, this is the biggest tell-tale sign of bankruptcy. This means that creditors have reached their breaking point and are no longer listening to your reasons. If you are at this stage, it is best to call a bankruptcy attorney to see your options.
These are some of the warning signs that bankruptcy is probably just around the corner. But if you find yourself faced with insurmountable debt and have decided to hire a bankruptcy attorney (which is probably your best option) then you need to research carefully on who to hire. Make certain that the attorney has the experience, especially in handling bankruptcy cases, and that he will be available when you need him. Filing for bankruptcy is not an easy process, but it can be a smooth sailing one if you have the right partner to help and guide you through the whole process!