January 19, 2018
Disclaimer: All the information that you’re about to read below points out some key signs of bankruptcy that you may not be aware of before it’s too late. It isn’t supposed to replace traditional advice as provided by a licensed lawyer who you should contact right away.
You may have borrowed money before from someone you know after getting caught in an emergency situation that left you strapped for cash. You may also have used your credit card to buy something you urgently needed, or you may have taken out a loan on your car or even your house. Whatever the circumstances that led to you incurring some debt, there’s absolutely nothing wrong with it as long as you can settle it. However, if all your debts have begun piling up and you’ve already exhausted all repayment options available at your disposal, you have to watch out for some key signs of bankruptcy that you may not be aware of before it’s too late.
Some Signs of Bankruptcy to Watch Out for That You May Not be aware of
Declaring bankruptcy is usually reserved for situations wherein the debt that you incurred has grown to the point of becoming unmanageable on your own. Thus, you wouldn’t want to file for Chapter 7 in which all your property that isn’t exempt would be seized and sold by your creditor to make up for the payments that you missed.
Neither would you want to file for Chapter 13 which restructures the payment plan that both you and your creditor have previously agreed upon that allows you to repay in smaller amounts but over a longer period of time. For you to not resort to declaring yourself as bankrupt, you would have to spot the following signs of bankruptcy that you may not be aware of and resolve them while you can still manage your debts instead of letting them sink you deep in financial ruin.
1. You’ve been paying only the minimum amount due indicated on your credit card’s monthly billing statement.
For those who don’t like bringing copious amounts of cash in public, a credit card is a more convenient option that doesn’t leave an unattractive bulge in your wallet. However, having a credit card entails anyone who applies for one to use it sparingly and responsibly.
● If you have a credit card yourself, you might have noticed that every billing statement you receive in your mail has a minimum amount due indicated in it. You shouldn’t assume right away that you only have to pay for your credit card’s minimum amount due every month.
● What you would want to do instead is to look for the total outstanding balance in your billing statement and make it a point to pay no less than that every month so that you won’t lag behind on any payments that you have to make to your credit card.
2. You don’t have a rainy day fund that you can use to bounce back from a huge financial upset.
If you only have one personal savings account where you’re depositing all your wages and bonuses that you receive in your job, you’re not managing your finances right. Settling for a single bank account can put you in an undesirable position should any unforeseen incident cost you a considerable amount of money.
● For you to fully recover in case you experience a major financial setback, you would need to open another bank account and designate it as your rainy day fund.
● Your rainy day fund should only be used for emergencies, so you should learn to control your spending habits as well by not withdrawing any amount from it.
3. A third-party collection agency has been incessantly calling you or sending you a demand letter to inform you of all the debts that you need to pay as soon as possible.
If several months had passed and you still weren’t able to pay back the money that you owe your creditor, they’d be forced to hire a third-party agency in charge of making sure that you shape up financially for you to be able to repay all your debts.
● While a debt collection agent would gently remind you at first over the phone about the money that you owe your creditor, their calls might eventually get more and more urgent and stern in tone if you’re still skipping on your payments.
● The debt collection agency that your creditor had hired can also mail you a demand letter asking you to pay all your debts back or risk facing a lawsuit in which you’ll have to go to court and defend yourself. Having some debt to your name is fine as long as you can pay back the money that you owe. However, if your debts have been accumulating at an alarming rate until you can barely keep up, thoughts of filing for bankruptcy may have crossed your mind. But before you can declare either Chapter 7 or Chapter 13 bankruptcy, you should first identify some signs of bankruptcy on your end that you may not be aware of and address them before it’s too late. And to help you fully conquer your insurmountable debt, you would want to discuss your current financial state with a lawyer who can assess further if you really have to file for bankruptcy instead.
Cecille Cunningham loves writing for the common reader, especially on helping them make sense of various topics on the law. She currently writes for multiple law firms. In her spare time she cooks for his family and friends.