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Filing for bankruptcy is a big decision. How do you know it’s right for you?
Chances are, bankruptcy is right for you if you meet any of the following criteria.
#1) Using credit cards to pay for necessities.
If you’re doing this, you’re not alone. Most Americans do.
But it’s not a good financial sign. It’s a sign you’re living well above your means. If your income isn’t going to change for the better any time soon this situation won’t stop. Not without help.
#2) Using credit cards to pay other debts.
“Debt juggling” can keep you out of trouble for two or three months. But it always catches up with you in the end.
Interest continues to accrue, and sooner or later you don’t have any money left on any card to pay anything. It’s like a great big game of musical chairs. And you’re the one that’s going to be left standing when the music stops.
#3) You’re relying on payday loans.
Payday loans are some of the most toxic loans you can possibly engage with. This large, predatory industry drives plenty of people to bankruptcy all by itself.
And if you’re using “rollover” loans to manage your expenses: watch out. Eventually you’ll find you can’t keep up with those, either.
#4) You’re making minimum payments, and only minimum payments, on your credit cards.
It can take you as much as 30 years to pay off a credit card using only the minimum payments. And you can end up paying three or four times what you spent in both interest and fees.
At this point, playing catch-up is all but impossible for most people.
#5) You can’t seem to get any money into savings.
It’s hard for nearly everyone to get money into savings, but it’s also a big financial danger. A single emergency could force you to max out your credit cards, or dip into money you needed for other, routine expenses.
#6) You’re seeing interest rate hikes.
Sometimes interest rates go up because of federal rate hikes.
But complex algorithms also tell the credit card industry when you’re showing signs of getting into trouble. When they do, your existing cards start raising your rates.
This pushes you deeper into the hole than ever.
#7) You’ve got debts in collections.
If you have more than one debt in collections you are probably in a great deal of financial trouble. One debt is something you forgot. Five to ten debts mean you’re getting endlessly harassed, and are in danger of getting sued.
#8) You’re facing a repossession or a foreclosure.
If you’re in danger of losing your house, car, or both, you should know bankruptcy may be the only way to save either. These are the biggest, worst signs that you’re headed for financial ruin.
Don’t be afraid to declare bankruptcy.
Bankruptcy is a legal way to escape the stress all these debts are causing you. It can give you a fresh financial start so you can reorganize your spending and live within your means.
Anyone can get into trouble through no fault of their own. When you do, this legal proceeding can pull you out again.