Signs of Financial Distress:
1.
Missed mortgage or car payment. This is usually one of the first signs of trouble. Immediately
stop and assess your situation.
2. Going Over Your Credit Limit.
High credit card debt is the largest contributing factor in most bankruptcies. In general, you should always have approximately
50% of your credit line available for use in case of emergency. If you're maxed out, you may be headed for trouble.
3. Paying only 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. You should immediately check the interest
rate on your credit card balance and see how much of your minimum payment is actually going toward your debt? Check out our
loan calculator page.
4. Mistaking your home for an ATM. It is not wise to use
equity in your home to pay off credit card debt unless you are destroying the credit cards to ensure you will not run
up those bills again. If you've refinanced before and are thinking of doing it again, you're probably in
trouble. Give careful consideration to using your home equity loan or line of credit for items
other than home improvements. Make sure you can afford the payments without strain.
5. No
money put aside for an emergency. Living from paycheck to paycheck with little or no savings for emergencies
puts you at risk for bankruptcy. Nearly 1 in 2 Americans do not have at least $1000 in savings - are
you one? If so, you need to stop and assess your financial situation.
6. Co-signing
a loan for someone else. Co-signing loans for others invariably leads to trouble. The fact that a person needs
a co-signer should indicate to you that he or she is a credit risk. This means that you too could end up being stuck
if that person does not pay. Often times, those who file for bankruptcy have co-signed loans for others.
7. No health insurance or inadequate coverage. An illness can strike without warning.
Injurious accidents are usually not planned. Things can certainly go wrong in a hurry. Medical bills
are a major factor in one out of five bankruptcies!
8. Borrowing too
much on student loans. It may be that your student loan payments are so high you can't afford your
living expenses. Rather than continuing on with more schooling, think about some basic arithmetic first. If
another degree will cause you to be unable to meet your living expenses including your student loan payments, you may need
to pass on taking that program now.
9. Harassing phone calls from creditors.
If you are screening your calls to avoid being caught by collectors, you are probably already in serious financial trouble.
Also, you may want to check out our Debt Collection page for more information if this is a problem you are dealing with.
10. Bank account frozen
or other asset leined/levied. If your bank account has been frozen or your employer has received notice
of a wage garnishment against you, this means that a creditor has obtained a judgment against you for nonpayment or that the
IRS has acted to levy your assets. This is a sure sign that you are in financial trouble.
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