Personal bankruptcy is never the preferred position to be in, however lots of individuals find relief in dealing with their financial problems and starting over. No one is perfect, and people make mistakes. But too many people put off filing for bankruptcy for far too long. They choose to ignore the elephant in the room and spend many years fighting just to make ends meet. Yes, bankruptcy is never pleasing and many people find it humiliating, nevertheless it is the very first step towards financial freedom. Always remember that there is a life after bankruptcy.
If you’re struggling financially and thinking about bankruptcy, it’s important to identify the warning signs. Here are a few signs that you’re in serious financial hardship.
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 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. Surely, it’s fine to have a balance on your credit card debt for a few months, but it’s important 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. Most financial specialists highly recommend having three to six months of living expenses in a separate bank account. This account should cover all of your expenses for that time frame: rent, meals, transport, bills. What happens if you lose your job? Or you can’t work due to illness? And if you’re buying luxury items while you have high interest loans remaining, 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 handy 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 charges are particularly high. If you are using credit cards to pay for bills given that you simply don’t have enough savings, 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 looking at personal bankruptcy. Credit cards can be quite detrimental if used incorrectly. Paying bills with debt only results in more debt, with big interest charges added on. If this sounds familiar, seek professional advice as soon as possible.
Debt collectors are getting in touch with you
It may seem obvious, but if debt collectors are frequently hassling you on the phone or in the mail, you should look at bankruptcy help. Consider it this way; lenders who conclude that they aren’t able to recuperate their money from you will sell your debt at a discounted rate to debt collectors. If creditors have lost faith in your capacity to pay your bills, there is surely a problem. If you’re scared to answer the phone or check your mail due to debt collectors, it’s time to take action. You can only neglect those threatening phone calls and letters for so long before your quality of life starts to corrode. Pick up the phone and call the specialists, that’s what they’re there for.
Are you so stressed 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 diminishing 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, in truth, the first step towards financial freedom. Speak with 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 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 financial condition, contact Bankruptcy Experts Penrith on 1300 795 575 or visit https://www.bankruptcyexpertspenrith.com.au