Bankruptcy is not something most people plan or look forward to. Besides potentially injuring your credit score, bankruptcy can remain on your credit history for quite some time – and these can have a range of consequences.
Unfortunately, life is full of uncertainties. And except in extreme cases like a sudden injury, emergency home repair, divorce or job loss, you’ll often know you are headed for bankruptcy long before it happens. Here are three tell-tale signs that you could be headed for bankruptcy:
Your finances have taken a significant hit
It is not uncommon to have a moment in life when you are financially strapped due to overspending. This can make it difficult for you to pay your bills. A financial hit, however, is a different story.
A loss of a job, an expensive divorce or a medical emergency can take a huge toll on your finances. If these life circumstances destabilize your ability to pay bills, leading to debt, you may consider filing for personal bankruptcy.
Debt collectors won’t give you a break
Most people have a mortgage, a lien on their cars or credit card debts to pay on a monthly basis. A default on these payments means only one thing: phone calls from debt collectors; and this can be very stressful. If debt collectors are hot on your heels, and may you have exhausted all options – you could give personal bankruptcy serious consideration.
You’ve resorted to your retirement saving to pay your bills
If you are pulling from your retirement funds or savings to get by, you need to consider filing for bankruptcy. Remember, you set up these investments to take care of your financial needs in old age. As such, they should be off-limits, at least at the moment.
Protecting your rights
The decision to file for bankruptcy is one that you do not want to take lightly. Whether you are missing payments or simply do not qualify for a debt management plan, learning how personal bankruptcy laws work can help you know whether the time is right for bankruptcy.