10 Warning Signs You Need to File for Bankruptcy
 by Michael David

10 Warning Signs You Need to File for Bankruptcy

Most people today run into financial hardships at some point in their life.  Many times filing bankruptcy is the only option to relieving yourself of financial burdens..  Before taking the plunge to publicly announce to the world that you are flat broke and unable to pay your bills you should read this article and see if your situation is within any of the warning signs. 

Filing bankruptcy is a serious matter that can affect your credit rating for up to ten years.  There are many factors that come into play when a consumer is making the decision to file for bankruptcy.  If bankruptcy is avoidable then you should seek professional financial advice and consultation.  Options before filing bankruptcy is to consolidate your debt, negotiate your debt balance, have a garage sale, find a second job, etc.  Bankruptcy should be the very last resort for getting out of debt.  The law today requires that you consult a financial advisor or bankruptcy attorney when filing for bankruptcy. 

Many times a person is in need of financial help for relieving themselves of debt and bankruptcy is distance truth for them, but without knowing the warning signs you may think you are the perfect candidate for bankruptcy when in reality all you need is financial advise.  Use the signs below to recognize when it is time to file for bankruptcy:

1. You are unable to make routine minimum payments required for credit cards and loans. This is a sign that you are in severe financial distress and should not be ignored.
2. When you examine your expenses it is determined that you have been spending much more than you earn on a regular basis. This means that you have been accumulating debt each month. Each month the debt gains interest - making the debt more expensive as you add on to it. This is a vicious cycle and it's called "financial suicide". This type of spending has to come to an end or your credit score is going to die miserably.
3. You are over your limit or at the limit on your credit cards. To maintain a healthy financial situation, it is important to remain under thirty percent of the credit limit on your credit cards and loans. If you are teetering at the limit, unable to pay down the debt this can lead to trouble.
4. You are unable to pay each bill every month and therefore skip bills for one to two months at a time and are facing notices for collection on a regular basis.
5. You are not making enough money. Are you making enough money to cover your expenses each month while contributing to a savings account or an emergency fund? This can lead to financial distress and bankruptcy.
6. Expenses can bring panic - there are many unexpected expenses that can occur such as vehicle repairs which can occur and are mostly covered by an emergency fund. For those consumers facing bankruptcy, these expenses can cause upheaval in the finances along with high levels of stress. With credit cards at the limit and no savings account, an accident or repair can seem like a nightmare.
7. You receive countless phone calls from credit agencies that are seeking bills for collection. When creditors are calling, it can be detrimental to the credit report - as collections are the worst thing that your credit report can face. If you are unable to afford these payments then it may be time to consider bankruptcy.
8. You are afraid to speak to your partner about money issues or avoid the topics altogether. This can be a sign of financial disarray and should not be ignored. Ignoring the problem can only make it worse as time passes.
9. You have no idea about all the accounts on your credit report. You are unsure about which debts are paid - or even how much you owe to creditors.
10. You have thought about bankruptcy or were considering filing with a bankruptcy attorney. When you have had these thoughts, chances are that meeting with a bankruptcy attorney is the next logical step.

Use the above as guidelines when considering filing bankruptcy. If you are experiencing one of the signs above then it doesn't necessarily mean you are in need of bankruptcy, but you should examine your financial situation and get a handle on the direction your credit rating is going. You may want to first consult a financial guru before filing bankruptcy. If you make the decision you need to file bankruptcy then before filing you'll need to consult a financial advisor or bankruptcy attorney, it's the law.  Learn how to choose your bankruptcy attorney.

Before filing bankruptcy you should read Dave Ramsey's Total Money Makeover: A Plan for Financial Fitness, it will change your life and help you avoid bankruptcy altogether.

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