2020 COVID-19 pandemic breaks the backbone of world economies since 2008 economic meltdown(Great Recession). Bankruptcies around the country is rising and giving severe headaches to the business owners.
Based on your specific individual or business conditions, filing for bankruptcy may be an option to get debt relief and a fresh start. It is important to consider all options before you decide to file. Creditors are often open to working with debtors to resolve their debts. If you are having financial problems, financial planning may be an option.
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You can avoid bankruptcy by controlling your financial habits. Below are the 4 warning signs which are clearly showing the path of bankruptcy down the lane.
1) Your spending is higher than your earnings
This is why it is number one warning sign/point. It is the most common warning sign that could lead you to bankruptcy. Many individual/business owners have to file bankruptcy because of an uninsured, under-insured, or job-related emergency. Some people simply manage their money poorly on a daily/regular basis.
If you believe you might be in this category, take a moment to list all your monthly expenses. You can use your bank account, credit card statements and bills to locate each expense and then add them all together. Is the sum greater than your monthly earnings?
You have two choices: Make more money or learn how to manage your money better.
You can either trim your monthly expenses or earn more money. Or you can do both. You will find yourself with unpaid credit card debts and possibly bankruptcy if you don’t act today.
2) Credit Cards are heavily used
Credit cards are another option. These cards are very useful but it is not wise to keep a revolving account due to the high-interest rates.
First, pay your credit card in full if you have cut your expenses or earned a little extra income. Start an emergency savings account. You can save $50 per month to be prepared in case of an emergency. Alternatively you could build your emergency/backup funds too.
Start saving for emergencies today OR You may be required to file bankruptcy.
3) Inability to pay Compulsory Payments due to Lack of Funds
Money is essential for everything, from car tune-ups to dental work. These are essential services. These services are essential and you could be at greater risk than if the expense is made. You may not have the money to pay for these things if you spend too much, earn less, or save enough.
For example: a lack of dental care can lead to not only dental problems but also health issues that can cause damage to your heart.
You are at great risk of injuring others and property, if you don’t use eyeglasses that have your new prescription lenses.
You will not be able to pay for your prescription medication refills. Avoiding or neglecting your daily medication for high blood pressure? This can cause a heart attack. You may not be taking your insulin. If diabetes is not treated properly, it may cause many other health problems too.
Water damage to your biggest investment, your house, can be caused by a failure to install a new roof or repair a plumbing leak. You also risk damaging your second largest investment, your home, and leaving your car stranded.
Your home, car, and health are all important. You will be able fund your necessary expenses if you are able to spend less or earn more. If you instead fund them with credit, however, you could end up filing bankruptcy if your monthly payments are not affordable.
4) Stress from not having enough money
Many of us consider finances to be the most stressful aspect in our lives. Chronic stress can lead to or exacerbate serious health issues, including:
1) Cardiovascular disease
2) High blood pressure
5) Depression (anxiety and other mental health issues can all be caused by depression).
Chronic stress could destroy the daily life of any individual. It can also affect the quality of life too. You can take control of your finances by following the advice in this post. This will help you to take better care of your emotional and physical well-being. A bankruptcy attorney may be able to help you if it is too late or you are unable to repay the debt.
These warning signs could be a sign that you are at risk of filing bankruptcy. You can get rid of your unsecured debt by filing bankruptcy. Your credit score may take a hit but you’ll get a fresh start financially. These warning signs could be a sign that bankruptcy is imminent.