Warning Signs that Bankruptcy is on the Horizon for You

No one goes through life expecting to file bankruptcy, but it happens. Sometimes, the warning signs are clear, while other times they are not so obvious. Regardless of your financial situation – or what you assume it will be like in the future – it is imperative that you know the warning signs of bankruptcy.

10 Signs You Are Headed Toward Bankruptcy

1. All of your credit cards are maxed out or on the brink of limits. If your credit cards are maxed out, and you have limited available credit, you will notice your credit score drops. Why? Because FICO detects that you are a high-risk category for bankruptcy and are not good with money management.
2. You have no extra money each month to save. If you live paycheck to paycheck and there are no funds left to put toward savings, then you are living beyond your means.
3. You do not have extra to pay down debts. Paying the minimum will decrease debt, but will also cost hundreds to thousands in interest. If you pay extra each month, you can quickly get out of debt and save money. However, when you have no extra money to put toward debt, that is a warning sign that you are beyond your limits.
4. Needed items are pushed to the back burner. You had to skip buying groceries this month because you had nothing left after your bills; you stopped paying for health insurance; your vehicle needs tires, but you do not have funds left for them. These are all red flags.
5. You have taken loans against life insurance or retirement accounts. Once you take loans against life insurance or retirement accounts, you are in trouble. These assets are there to protect you when you retire, so if you are taking loans out early, you dwindle your retirement funds too.
6. Cannot obtain new credit. If you have paid your credit cards on time and are working on them, but cannot get new credit, you have been flagged as a high-risk consumer by FICO. They know you’re on the brink of bankruptcy, so creditors will not extend new credit to you.
7. Borrowing from one to pay another. Once you start borrowing from one credit card to pay another, or change your income tax withdrawals so that you get more each month to afford your lifestyle, you are in trouble.
8. Your bank account continually goes negative. Even if you have overdraft protection or an overdraft line of credit, if your bank account frequently goes negative month after month, you are living well beyond what you can afford.
9. You are behind on loan payments. Once loan payments – such as those on your mortgage and vehicle – default, it is a sign of financial distress. Not only can these lenders foreclose and seize the property, but it is next to impossible to catch up on the payments.
10. Creditors are harassing you and threatening to sue. Perhaps you have creditors calling you daily asking for payments. Maybe you are already being sued by a creditor for a past due account. Regardless of how bad it is, once creditors are calling, it is a sign of worse things to come.

Is It Time for Bankruptcy? Contact a Bankruptcy Attorney to Find Out

If one or all of these signs are present in your life, it is best to consult with a bankruptcy attorney. An attorney can help decide if bankruptcy is right for you, and which form of bankruptcy is best for your situation.