Personal bankruptcy is never the ideal position to be in, however many people find relief in dealing with their financial troubles and starting afresh. Nobody is perfect, and people make mistakes. But too many men and women put off filing for bankruptcy for far too long. They prefer to ignore the elephant in the room and spend many years struggling just to make ends meet. Yes, bankruptcy is never pleasant and lots of people find it embarrassing, however it is the very first step towards financial freedom. Always bear in mind that there is a life after bankruptcy.
If you’re struggling financially and contemplating bankruptcy, it’s useful to identify the warning signs. Here are a few signs that you’re in serious financial trouble.
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 salary isn’t increasing. Interest charges and fees will shortly force you to make a change, either by getting a second job or consolidating your loans. And if you don’t make a change, something must give at some time. Of course, 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. The majority of financial experts advise having three to six months of living expenses in a dedicated savings account. This account should cover all of your expenses for that time period: rent, meals, transport, bills. What would happen if you lose your job? Or cannot work due to sickness? And if you’re buying luxury items while you have high interest loans overdue, you should really get your priorities straight. Without three to six months of living expenses in your bank account, personal insolvency may well become a reality.
Using credit cards to pay your bills.
Credit Cards are a practical way to purchase items by giving yourself a short-term loan, particularly in today’s cashless world. Ordinarily, there is an interest-free period of a month or two, but after this time, the interest rates and charges are very high. If you end up using credit cards to pay for bills considering that you simply don’t have enough cash, 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 precarious if used improperly. Paying bills with debt only generates more debt, with big interest charges added on. If this sounds familiar, seek professional advice as soon as possible.
Debt collectors are phoning you
It may appear obvious, but if debt collectors are invariably harassing you on the phone or in the mail, you should look at bankruptcy help. Imagine it this way; creditors who conclude that they can’t recoup their money from you will sell your debt at a reduced rate to debt collectors. If creditors have lost faith in your capability to pay your bills, there is surely a problem. If you’re frightened to answer the phone or open your mail due to debt collectors, it’s time to take action. You can only avoid 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 afraid about your financial future that you can’t sleep at night? This is probably the greatest warning sign that you’re heading for bankruptcy. When your health and happiness are deteriorating as a result of your financial situation, it’s time to acknowledge that you need help simply to improve your quality of life. Bankruptcy is not the end of the world, and is, literally, the first step towards financial freedom. Speak to 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 distress and are heading towards bankruptcy if changes aren’t made. Personal insolvency is the final step in a long process, and normally there are options before you need file for bankruptcy. To find out what options you have, or to speak with someone about your circumstances, contact Bankruptcy Experts Fremantle on 1300 795 575 or visit http://www.bankruptcyexpertsfremantle.com.au