When is the right time to file for bankruptcy? There are times when we just can’t make ends meet. We’re short on funds and the amount we have to pay for our personal loans is increasing instead of decreasing.
Sometimes, our debts pile up so much that we reach a point where we need to file for bankruptcy to prevent our financial situation from going further down the drain.
So how do we know if we should file for bankruptcy? Let us look at these seven signs:
#1). Minimum payments seem too much
If you start to get bothered by monthly minimum payments on your credit card or personal loans and you think that even the minimum amount is too much to pay, then you should take it as a sign that you’re already deep in financial trouble.
#2). You skip paying bills
The same goes for paying bills. If you skip paying some of your bills for a month or more and you start putting off settling them—with the payment on your personal loan already long overdue—it means your finances isn’t as healthy as it once was.
Getting regular notifications about paying your bills or using your credit card to pay for basic essentials such as food, gas, and toiletries is a sign that you’re financially in bad shape.
#3). You get several phone calls from credit card companies
If credit card companies or other loan agencies start to call you all the time to collect payment for your bills, it could mean your current financial situation isn’t too good, as you haven’t been paying them regularly.
Having creditors call you all the time can lower your credit score, and decrease your chance of increasing your credit on your credit card and other loans you may be interested in to apply for the future.
#4). You spend more than what you earn
Another sign that tells you if you need to file for bankruptcy or not is if you begin to collect more debts and expenses every month, and you find out, after a close examination of your finances, that you spend more than what you earn.
The longer your debt stays with you, the harder it’ll be for you to pay them off, as interest rates add up and increase for every month of you missed out on paying for a personal loan or insurance plan.
A life filled with endless debts and spending is a form of financial suicide—one you could stop when you file for bankruptcy.
#5). You exceed your credit limit
The general rule for credit card limit is to use just below thirty percent of your total credit limit. If you’re using the exact limit or even exceeding the limit, it could lower your credit score, and not being able to pay off your debts can mean problems in the future for your personal finance.
#6). You avoid talking about your debts to your spouse
If you don’t talk to your partner about money—because you’re afraid it may cause a rift between you two, then this is a sign of a financial problem—one that needs to be dealt with right away.
Choosing to avoid the issue can only make the problem worse as time goes by. Better be transparent about your money troubles to your spouse, and file for bankruptcy as soon as you can.
#7). You don’t earn enough
If you see that what you earn isn’t enough to cover all your daily expenses such as basic necessities plus money for an emergency fund and unexpected expenses such hospital bills, house repairs, car maintenance, family support, and other unplanned costs you have no way of knowing in advance, then maybe you need to file for bankruptcy.
#8). You can’t keep up with how much you owe
Another sure way to know if you should start filing for bankruptcy or not is when you know—or finally realise—you can’t keep up with exactly how much you owe in terms of personal loans, credit cards, and other forms of debts, and you’re not sure which among your debts have been paid or not.
To be able to pay on time and to avoid high interest rates, it’s essential to always note what you owe, what you’ve paid and how much balance you still have to make up for. Keeping an organised list will help you deal with debts and payments that much easier.
If, after reviewing these signs, you feel like you agree with most of them, then maybe it’s time to look for a bankruptcy attorney and consult on what type of bankruptcy you can file for—one that would suit your current financial situation best.
This guest post was submitted by Ian G. Elbanbuena
Ian G. Elbanbuena is a blogger and infopreneur who writes on various topics mainly finance, self-improvement, business and marketing. At present he works on behalf of CompareHero – a Malaysia’s leading comparison website that helps individuals in making the best decision by comparing rates from credit card, personal loans and broadband providers in Malaysia.
Ian G. Elbanbuena is a blogger and infopreneur who writes on various topics mainly finance, self-improvement, business and marketing. At present he works on behalf of CompareHero – a Malaysia’s leading comparison website that helps individuals in making the best decision by comparing rates from credit card, personal loans and broadband providers in Malaysia.
