Having to file for bankruptcy is absolutely one of the worst statements that a person can make about his financial well-being. Bankruptcy is not something that happens to big business houses. It can just as easily happen to an individual. Basically bankruptcy is a state where a person or corporation is unable to pay back the debt and the money borrowed. If a person finds himself in such a situation then he may also find himself filing for bankruptcy.
These are some of the common warning signs that you may be facing a potential bankruptcy.
Not having insurance for your medical can prove to be disastrous. Medical bills can be extremely high and without having insurance to pay for it can quickly result in you surmounting a debt that you can’t afford to pay back. It is triggered that medical bills are factor in one out of five bankruptcy filings.
Credit Card Debt
Credit card debt is a huge factor in a why people face bankruptcy. If you have been running close to your credit limits or have been getting by by making the minimum payments every month and it probably means that you are facing financial trouble. Supplementing income by the use of credit is not a solution. Making just the minimum payments can take you 20 to 30 years to pay off the balance on your credit card. Running close to the credit limit means that you’re incurring a huge amount of debt and any single incident can mean that you’re unable to pay this balance. Running close to limit credit card balance on multiple credit cards means that you are running a huge risk of having to file for bankruptcy.
Ideally a person should make an emergency fund that covers the living expenses for 6 to 12 months. If you have no savings you’ll have to rely on the available credit and credit cards in case of dire emergency situation presents itself such as being unemployed. Having to run a huge build on credit and out any means of paying it back put you at a higher risk of going bankrupt. It is estimated that 43% of American households have less than $1000, saved which is an alarming fact.
Tax liens, foreclosure and Repossession of Car
These are serious incidents and are a sign that you are facing severe financial trouble. Not ignore these signs and take help as soon as possible.
In order to fix a bad situation and prevent having to face the that consequences of filing bankruptcy you should avoid impulse spending
Not use a credit card unless you’re surely can afford to pay off the balance
Not sign up for too many credit cards just because you’re getting free
Take out a mortgage that you can comfortably afford to pay off
Make sure you are adequately covered by medical, homeowners and automobile insurance
Not make speculative and high-risk investments
Think carefully before cosigning for a person on their credit application
Make a monthly budget and stick to it