When a person is in economic distress, it may still be possible to avoid bankruptcy by being alert to some key warning signs, the most important of which are listed below.
Key pre-bankruptcy warning signs:
1. Tax lien or foreclosure on your home, or repossession of a car or other item you failed to make timely payments on. These are signs that the wheels are coming off your financial situation.
2. Maxing out on your credit cards or charging more than you can pay off each month. Credit card debt is one of the major factors in lots of bankruptcies. It’s not a good idea to use more than 40% of your available credit at any one time. This gives you flexibility in case of job loss, illness, divorce, or other threat to your income.
3. Paying the minimum balance on your credit cards. Since it can take 20 to 30 years to pay off your credit card balance when you pay only the minimum payment, if that’s all you can afford to pay, you really can’t afford to buy whatever it is you’ve been buying. Have you checked the interest rate on your credit card balance?
4. Over-using home equity loans. Give careful thought to any inclination you might have to use your home equity loanor line of credit for items other than home improvements. Make sure you can afford the payments without strain.
5. No emergency fund. If you live from paycheck to paycheck with little or no savings for emergencies, you’re at risk for bankruptcy. Are you one of the nearly 1 in 2 Australians who do not have at least $1,000 in savings?
6. Co-signing a loan for someone else. Co-signing loans can lead to trouble. The fact that a person needs a co-signer may indicate he or she is a credit risk. You could end up being stuck. Ill-advised co-signing is a common factor in many bankruptcies.
7. No health insurance or inadequate coverage. An illness can strike without warning. Injurious accidents are usually not planned. Yes, things can easily go wrong in a hurry. Medical bills are a factor in one out of five bankruptcies!
9. Harassing phone calls from creditors. If you are avoiding the letter box and the letting the phone ring because you are too afraid to speak to collection agencies, this is a sure sign that not all is well with your finances.
If you are currently experiencing any of these problems, don’t wait until it is too late. You need the right advice from a licenced and accredited insolvency practitioner to discuss your options.
Don’t live in fear. Be proactive and take steps to rescue your financial situation. Call Personal Bankruptcy Gold Coast today on 1300 60 70 60.
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