Bankruptcy Signs You Should Try To Avoid
Bankruptcy Signs You Should Try To Avoid
Bankruptcy Signs You Should Try To Avoid
You should be aware of your financial well-being at all times. You might think that spending $50 here or there cannot possible bring financial ruin to yourself, but it is the combination of all the little $50 here and there that can lead to your downfall. You would never think that one little purchase/misstep can force you into bankruptcy, but if you keep ignoring and give no importance to how you are managing your money, bankruptcy can come upon you quicker than you can imagine. Here are some signs to avoid bankruptcy which you don't want to find yourself in:
You have a mortgage, but you do not know the terms of the contract
If you own a house, make sure you know the terms and conditions of your mortgage. Is your loan a fixed rate loan, an adjustable rate mortgage (also known as ARM), a zero interest loan, is there a premature repayment penalty? It is only prudent that you know the terms and conditions of the mortgage contract. Armed with this essential information, you will be able to budget your expenses around it. You need to understand every single term and condition of your mortgage contract. You do not want to be find out that you have to pay an extra $1,000 per month 2 years down the road and not be prepared for it. It is this kind of surprise expenses that can drive up the amount of debt you are carrying. The more debt you have, the higher the chance you will not be able to pay for it, hence the chance of bankruptcy.
A large credit card balance
Credit card is meant to be used when you do not carry the cash on you to purchase something affordable, and not for you to charge an item that you cannot afford. If you are so accustomed to buying everything using the credit card, you should think twice now when you are "charging" for that flat screen TV. Before buying something using the credit card, ask yourself if you have accounted for it in the budget, or if you can hold off making this purchase. Credit card purchases gives the power to enjoy what you are buying right then and there. But this need for instant satisfaction can cause you serious debt if you do not account for it in your budget. If you pile up debt upon more debt, you have a good opportunity that you will be looking into bankruptcy in the near future.
You have no disposable income
Not saving any of your income is the worst thing that you can ever do when you started working. Don't ever look down on idea that you need to save for the rainy days. Some of the most successful and wealthy people in this world also advocate the importance of savings. You can never tell if the economy is going to dip back into recession like 2008-2009. Recession also means massive laid off, and you might be one of the ones given the pink slip. Where would you have the money to support yourself? Since you have limited or no savings, you will probably opt to charge everything on your credit card. The more debt you accumulate, the more financially strapped you will be. It is easy to lose yourself financially using the credit card. One day you might have to find yourself a bankruptcy lawyer.
You will transfer the balance of one credit card to another
Balance transfer between credit cards is just a way to transfer the balance from one account to another. The total amount of your debt is still the same no matter if you have transferred this debt 1 time or 10 times. Do not get fool by the credit card companies with the teaser interest rate for doing a balance transfer. The teaser rate is only temporary and once it resets, you will still have to pay the high interest as previously. This debt will never go away if you keep doing the balance transfer between accounts. This situation can become worst if you accumulate more debt along the way, hence forcing you into bankruptcy filing.
Cash advance and payday loan is your way to get through the month
Payday loan and cash advance from credit cards can solve your temporary cash insolvency problem, but it should not be used to fund any big purchases on the "whim". Over the course of the years you are using cash advance or payday loan, you will find yourself in a lot more debt and bankruptcy will not seem like a fiction anymore.
A budget is the one thing that you should constantly review and make sure you are living within your means. So long as you can stick to the budget you have set for yourself, you should not incur so much debt that you have to seek for bankruptcy protection. Do not think that bankruptcy can solve all of your problems, it can relieve you of your debt, but it will also come with its own headaches too.
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