There are many reasons why individuals file for bankruptcy, but more often than not it is a accumulation of several reasons that push someone to take the frightening plunge to wash their slate clean and start anew. Below are some of the warning signs that you may need to think about filing bankruptcy.
You may need to consider filing bankruptcy if your expenses are increasing because of divorce, job loss, or medical bills, while your income is decreasing because of the same reason. As long as these two figures continue in their current direction, more and more debt will accumulate until you can no longer make all of the minimum payments. The bad news is that the only way to change this situation is to work harder to increase your income, since you may not be able to decrease your expenses. Ÿ You may need to consider filing bankruptcy if you have already gathered a large amount of debt and have no real means to pay it off within a reasonable amount of time. Since interest will continue to accumulate, you may find that paying it all off is impossible.
You may need to consider filing bankruptcy you are beginning to pay your bills late. Missing payments is a big warning sign to where you may be headed, even if you are still paying your bills. This is a sign that you are struggling and need to try and turn the situation around if you want to avoid filing bankruptcy in the future. You may need to consider filing bankruptcy if you have to give up certain things to make your current payments. Although it is wise to cut down on unnecessary things - such as cable TV and dining out - when you need to pay down bills, having to cut down on things such as health insurance, basic food items, and personal care items is red flag that filing bankruptcy may be your best strategy.
You may need to consider filing bankruptcy if you are having to borrow from one lender to pay another lender. This is a very bad practice that will run up a ton of interest charges on essentially the same debt. The longer you try and pull this off, the more money you will waste before filing bankruptcy becomes inescapable. It is also dangerous to assume that just because you can make your minimum payments that you are okay. Making the minimum payments usually does no more than take care of your interest fees for that month, while doing little to decrease your principle balance. While you think that you are pounding away at your debt, you are doing little more than just handing the lender free money and you will continue to owe year after year. If you have taken on second or third jobs and are still having trouble making more than the minimum, it may be wise to look into filing bankruptcy before you are subjected to the adverse effects listed above.
Sometimes filing bankruptcy is unavoidable. When this happens, it is better to cut your losses and file before you lose anything else.