Personal bankruptcy is never the ideal predicament to be in, however lots of people find relief in addressing their financial difficulties and starting afresh. No one is perfect, and people make mistakes. But a lot of people avoid filing for bankruptcy for far too long. They would prefer to ignore the elephant in the room and spend many years fighting just to make ends meet. Yes, bankruptcy is never appealing and lots of individuals 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 contemplating bankruptcy, it’s relevant 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 difficulties is when you can only afford the minimum repayments on your loans, yet your income source isn’t increasing. Interest charges and fees will soon force you to make a change, either by finding a second job or consolidating your loans. And if you don’t make a change, something must give eventually. Obviously, it’s alright to have a balance on your credit card debt for a few months, but it’s useful 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. The majority of financial specialists strongly recommend having three to six months of living expenses in a specialised savings account. This account should cover all of your expenses for that time frame: rent, food, transport, bills. What happens if you lose your job? Or can’t work because of illness? 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 savings account, personal insolvency may well become a reality.
Using credit cards to pay your bills.
Credit Cards are a helpful way to purchase items by giving yourself a short-term loan, especially in today’s cashless society. Generally, there is an interest-free period of a month or two, but after this time, the interest rates and fees are exceptionally high. If you find yourself using credit cards to pay for bills due to the fact 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 pay off one with another. This is a key sign that you’re heading for personal bankruptcy. Credit cards can be really detrimental if used wrongfully. Paying bills with debt only leads to more debt, with big interest charges added on. If this sounds familiar, seek professional advice asap.
Debt collectors are contacting you
It may seem obvious, but if debt collectors are continuously plaguing you on the phone or in the mail, you should look at bankruptcy help. Consider it this way; creditors who conclude that they aren’t able to recoup 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 unquestionably a problem. If you’re frightened to answer the phone or check your mail as a result of 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 begins to disintegrate. Pick up the phone and call the experts, that’s what they’re there for.
Are you so distressed about your financial future that you can’t sleep at night? This is possibly the biggest warning sign that you’re heading for bankruptcy. When your health and happiness are suffering because of your financial situation, it’s time to recognise 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. Talk with a bankruptcy expert to find out what options you have.
If you’re experiencing any of these warning signs, chances are that you’re already in financial trouble 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 with someone about your circumstances, contact Bankruptcy Australia on 1300 795 575 or visit http://www.bankruptcy-australia.net.au