People think that filling for bankruptcy is abrupt. One day you are living your life as usual, the next you are selling everything you ever owned so your debtors won’t sue you into oblivion. Yet, that’s not at all what happens. There are, in fact, several warning signs that someone is heading towards bankruptcy, and recognizing the warning signs can help you plan and even avoid such a fate.
1. You can’t pay your monthly bills on time
The very first warning sign that you are heading towards bankruptcy is being unable to pay your bills on time. And we don’t mean the Netflix subscription – we mean bills like power, the mortgage, and groceries. Consistently having to use credit to cover these basics expenses – and not paying them off – puts you at risk of snowballing interest.
Most people can only handle between 6 to 18 months, depending on their expenses, before the indiscriminate use of credit starts to have a major impact on their livelihood. Using savings accounts and investments to supplement your income is one of the first warning signs that you might want to consider some kind of debt relief program. After all, they can only last so long before that safety net runs out, and once it does, you are at an increased risk of bankruptcy
2. You keep borrowing money to pay OTHER debts
Related to the above, having to constantly borrow money to ‘catch up’ with your other payments is a big red flag. ‘You cannot borrow your way our of debt’ is an old saying for good reason, as either the money comes with the strings of very high interest rates, like payday loans, or social consequences. Sure, your mom or best friend can’t (and probably won’t) send debt collectors to your house, the stress of unpaid debts can strain even the best relationships. As such, if you find yourself in the position of having to constantly borrow money, speak with a financial expert, as they can advise you on your alternatives.
3. You dread to review a budget
The best way to prevent financial problems is by knowing where your money is going. Having a budget is an easy solution to this, outlining all your essential needs and other, routine expenses. However, if reviewing your budget and expenses has gone from a boring chore to something you actively dread, you might want to speak with a financial expert.
4. You lack an emergency fund
Most Americans think that just having a Credit Card can tide them over in case of an emergency, but without a solid plan of repayment, those loans can quickly snowball thanks to unforeseen circumstances.
Bankruptcy is never one big thing that happens, is death by a thousand cuts. Life challenges – an accident, a job layoff, the death of a spouse or parent, or a medical emergency – can strike at any time, for anyone. But bankruptcy is not a reflection of who you are as a person, but an event that can be prepared for and defended against with healthy preparation.
So if your entire strategy for when anything unexpected happens is “Put it on the credit card”, with no thought for what happens after… It would be a good idea to talk with a financial professional before an emergency happens.
Recognizing the signs that you may be heading toward bankruptcy is crucial in taking control of your financial future before it’s too late. If any of these warning signs resonate with you, don’t ignore them! Seeking timely professional advice can make all the difference. At the Law Office of Jon L. Martin, we’ve been helping individuals in Palm City and surrounding areas navigate debt relief and bankruptcy for over 20 years. Don’t wait until it’s too late—reach out today, and let us guide you toward a more secure financial future.
