Signs of Bankruptcy
Bankruptcy is a frightening possibility. People who feel that they have no choice but to claim bankruptcy often wonder how they got themselves into such a situation. Sometimes it is through no fault of their own, such as when illness occurs or due to a death in the family or divorce. However, many times the signs of bankruptcy are on the horizon for quite some time before it actually happens. Being able to recognize these signs can save you from having to go through the arduous process of declaring bankruptcy.
Financial Difficulties That Exist From Month to Month
If you are experiencing financial difficulties every month, it is important to find out why and then decide what you are going to do about it. Having occasional financial problems due to an unplanned expense is one thing, and it is something that everyone experiences at one time or another. However, if you are having the same problems month after month, you need to put your finances down on paper and see where the problem is. Once this is done, you can adjust your spending habits to fit your budget.
Your Credit Rating Is Getting Lower
It is important to know what your credit rating is. If you are having problems making your payments, that will be reflected on your credit score. Looking at your score on a regular basis can help you stay on top of your financial situation. It is important to check your score at least once every few months. That way, if your score is dropping you can be aware of that and then work to bring the score back up.
Your Debt to Income Ratio Is High
If your debt to income ratio is high, there is a good chance that you will eventually have problems paying your bills. While there is nothing wrong with using credit to buy things in certain situations, you must be extremely careful not to go too far with your credit. It is important that you use caution with regards to your credit. It seems obvious that you should not buy more on credit than you can comfortably pay for, but it’s surprising how many times people do this. It’s easy to let yourself slide and buy something that you really can’t afford to pay for. You have to ask yourself how badly you really need to make the purchase, and then ask yourself if you can comfortably afford to make the payments.
You Are Behind On Your Payments
If you are behind on your payments, you may find yourself with no other choice but to declare bankruptcy. It is imperative that you either keep your payments current or that you make payment arrangements with your creditors. Once you are in a situation where you think you are going to have to claim bankruptcy, you should definitely contact a bankruptcy lawyer. Each state has different laws and guidelines for claiming bankruptcy so if you live in say, PA, it is crucial that you seek guidance from those familiar with the Pennsylvania bankruptcy process. Doing so may buy you enough time to get back on track with your finances.
Keeping up with your finances isn’t always easy. However, if you follow the guidelines above you will be able to stay abreast of your financial situation. One of the most important ways to keep from being forced to declare bankruptcy is to be vigilant about your finances. If you know what is going on, then you are empowered to do something about it.