Anyone can experience financial crisis. If not handled correctly, financial mismanagement can lead to bankruptcy. You can lose your job, get sick and be struck with disaster or illness in the family. Preparing for these unforeseen situations can save you and your family from financial trouble and bankruptcy.
Let’s consider the signs that show that you may be headed for bankruptcy:
No Available Credit On Your Credit Cards.
This is a major red flag. If you’ve been using your credit limit to its fullest, your bankruptcy risk score is thru the roof! One of the leading factors to filing for bankruptcy is due to unsecured debt such as credit cards and unsecured personal loans.
You Are Paying Your Credit Cards Late.
If you can’t pay your monthly credit card bills on time, take a good look at the way you’re spending and how you’ve been handling your money. A few months of past due credit card debt is a bad sign.
Spending your home equity loan on unnecessary expenses.
A home equity loan lets you borrow money any time within your loan period. However, if you find that you need to constantly “dip” into that line of credit to pay your monthly expenditures, then there is a problem! If you are hitting this line constantly, keep in mind your house is on the line. Adjust your spending so that this line of credit is used ONLY for emergency purchases.
Not having health insurance policy.
Unexpected injury or illness is another HUGE cause of bankruptcy. Its now required that all Americans carry health insurance and if you don’t there is a tax fine. But for your own peace of mind, take advantage of the open enrollment periods of your local health insurance companies. Also look and see if you qualify for the national health programs.
Not saving for emergencies.
Emergencies can happen any time. If you don’t have an emergency fund, or a way to access money fast, then you could face bankruptcy.
Co-signing other people’s loan.
A co-signer is accountable for the debts he or she co-signed for in case the borrower defaults on his payment. You need to be very careful when agreeing to co-sign other people’s loans. Also be wary of adding people to your credit card account, some people do this to help friends or family members establish credit. But if you give this person a card, be ready to pay off what they spend too! Co-signing is VERY risky and we don’t recommend anyone do it.
Your bank is foreclosing your home.
This is a serious sign that you’ve really gotten into a difficult financial situation. Don’t wait for foreclosure before you start taking any action.
If you find yourself in any of these situations, don’t disregard the fact that you may be at risk of possible bankruptcy. If you don’t have any insurance yet, it’s time for you to get one. Budget your monthly salary wisely. Think twice before using your credit cards. Start saving and don’t spend more than what you can afford.
