For many, bankruptcy is a scary word. Most people don’t even like to consider the possibility that bankruptcy may be their best, if not their only, alternative. In this day and age, having some amount of debt is deemed to be healthy. If your total debt is extensive and too much to handle, however, it may be time to look into filing for bankruptcy.
Some of the things that indicate bankruptcy may be in your future include the following:
Dealing with Debt Collectors
Inability to Pay Bills
Impending Loss of Home
Failure to Deal with Sudden Financial Setbacks
Dealing with Debt Collectors
Many people fall delinquent on debt obligations. When this occurs, their accounts are often transferred to professional debt collectors for collection. Usually, this is an indication that their outstanding debt is outside the means of what they can afford to pay back. And that, in turn, is one of the main signs that they may be headed to the bankruptcy court for protection from their creditors.
But, it’s not a definite sign. If there is a Debt collector for only one particular debt, that on its own may not lead to filing for bankruptcy. Bankruptcy should always be filed as a last resort. If you can resolve the one matter and make consistent payments on the rest of your debt, then you most likely don’t need to file.
Inability to Pay Bills
The inability to pay monthly bills is one of the first signs that you may be headed for bankruptcy. Skipping a month of paying or using credit cards to pay bills is indicative that your finances are not as stable as you want them to be.
Impending Loss of Home
One of the scariest and most imminent signs that you may be headed for bankruptcy is the threat of losing your home. If you’ve missed a few mortgage payments, it may get to the point where the bank quits accepting your payments and files a foreclosure action against you. This means your home can be seized if you are unable to make the mortgage payments you agreed upon when you first bought the house. The house is not entirely yours until the mortgage is paid in full.
Sudden Financial Setbacks
If you’re in a comfortable financial situation, you should ideally have money saved for emergencies. Unfortunately, none of us know when we’ll face a sudden stroke of bad luck or have a hiccup in our otherwise smooth-running lives. We can’t predict a car accident or the sudden eruption of a wisdom tooth, so it’s good to be prepared. Unless your name is Warren Buffet, an unexpected financial setback can often lead to bankruptcy.
None of these signs may mean much at all if you’re dealing with a single creditor or issue alone. But when your debts have multiplied and are possibly dealing with multiple problems similar to the situations mapped out above, it’s perhaps time to consider filing for bankruptcy.
