Personal bankruptcy is never the best predicament to be in, however many people find relief in addressing their financial problems and starting afresh. Nobody is perfect, and people make mistakes. Yet too many men and women put off filing for bankruptcy for far too long. They choose to ignore the elephant in the room and spend many years struggling just to make ends meet. Yes, bankruptcy is never pleasurable and many 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 looking into 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 problems is when you can only afford the minimum repayments on your loans, yet your income source 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 point. Of course, 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 sinking 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 realise that your savings are being used to make repayments on your loans, you’re heading for trouble. A large number of financial specialists highly recommend having three to six months of living expenses in a specialised savings account. This account should cover all your expenses for that time period: rent, food, petrol, bills. What would happen if you lose your job? Or you cannot work as a result of a health condition? And if you’re buying luxury items while you have high interest loans outstanding, 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 society. 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 since you simply don’t have enough money, you’re on the brink of disaster. Some people will even have various credit cards so they can repay one with another. This is a key sign that you’re steering towards personal bankruptcy. Credit cards can be really destructive if used incorrectly. Paying bills with debt only leads to more debt, with big interest charges added on. If this sounds familiar, seek professional advice as soon as possible.
Debt collectors are contacting you
It may seem to be obvious, but if debt collectors are invariably harassing you on the phone or in the mail, you should think about bankruptcy help. Visualise it this way; creditors who believe that they cannot recover their money 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 undeniably a problem. If you’re scared to answer the phone or check your mail due to 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 starts to diminish. Pick up the phone and call the experts, that’s what they’re there for.
Are you so afraid about your financial future that you can’t sleep at night? This is possibly the greatest warning sign that you’re moving towards bankruptcy. When your health and happiness are deteriorating because of your financial predicament, 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. Consult with a bankruptcy expert to find out what options you have.
If you’re experiencing any of the above warning signs, chances are that you’re actively 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 talk to someone about your situation, contact Bankruptcy Experts Hobart on 1300 795 575 or visit http://www.bankruptcyexpertshobart.com.au