There are some people who are naturally good at managing money, and others who struggle to stay within a budget. Debts can pile up to an unmanageable state very quickly if a person is not paying attention, and this can end in bankruptcy being the only option.
So, how can consumers be aware they are heading down a dangerous financial path? Here are 5 signs you are heading for bankruptcy:
#1: Mounting medical debt.
According to nerdwallet, medical debts are the leading cause of personal bankruptcy. Dealing with an unexpected illness or an unforeseen accident can propel even financially stable households into ruin. If a household is dealing with crushing medical bills, filing bankruptcy may be the only viable option.
#2: Paying monthly bills with credit cards.
A household is heading for big financial trouble if the income is not covering the basic monthly bills like rent and electricity. If a person is adding these bills to his credit card balances, this is a temporary fix, and it's getting him in deeper each month. Paying monthly bills with credit cards is a BIG red flag of impeding financial ruin.
#3: Paying credit cards late (or not at all).
Large credit card balances can result in monthly payments that cannot be met. This begins a cycle of stiff late penalties, hefty interest fees, and decreasing credit scores. If a person is struggling with paying the minimums on his credit cards, he is in over his head financially.
#4: Zero savings.
If a household's saving account has no money in it, the financial health of that household is unstable. This means that all emergencies- car trouble, house repairs- must go on a credit card. Again, this is digging the household deeper and deeper into debt that may never be able to be paid off.
#5: A dining room table piled with unopened envelopes.
A common coping mechanism for people who are financially sinking is to ignore the issue. However, avoiding creditor phone calls and leaving bills unopened will not make the problem go away. If a person catches himself doing this, he needs to pull his head out of the sand and consider his options.
A person needs to empower himself when it comes to his financial stability. Always maintain an awareness of these 5 tips when gauging your financial situation. And remember: personal bankruptcy may be your best answer when buried in debt.
If you are considering filing personal bankruptcy, contact us. We will answer your questions so you are able to make an informed decision.