4 Bankruptcy Warning Signs
Bankruptcy rarely happens overnight. In fact, there are several clear indications that a person might be headed for for financial strife. Are you headed for bankruptcy? Take a look at these five bankruptcy warning signs and see if any apply to you:
1. Always Living Payday-to-Payday
Many of our client’s incomes barely cover their monthly expenses. Sound familiar? Living pay-cheque to pay-cheque can lead to serious trouble if you are suddenly laid-off or unable to work. Often, the only way to pay the bills is to pay them on credit, which then leaves less money for living expenses the following month. This scenario can create a cycle of debt, which may then lead to bankruptcy further down the track.
2. Only Making the Minimum Repayment on Credit Cards
If you carry a large balance and only make the minimum repayment, bankruptcy could be in your future. It can take up to three-times longer to pay off a credit card if you only make the minimum payment each month. If that’s all you can afford, you’re probably living beyond your means.
3. No Savings
Australians, as a group, carry a huge amount of debt. We are happily able to spend more than we earn, thanks to easily available credit. However, this leaves many individuals without any savings to fall back on. Do you have enough savings to deal with unexpected expenses? If not, you could be at risk for bankruptcy.
4. Inadequate Insurance
Someone who’s never needed insurance will tell you that it’s too expensive. Someone who has needed insurance will tell you that it’s priceless. It pays to make sure you’re protected in case disaster strikes.
While it may be necessary in some cases, bankruptcy is not a pleasant experience. However, if you catch the signs early, bankruptcy can almost certainly be avoided. If any of the above indicators apply to you, it’s probably time to re-assess your finances. If several of these indicators apply to you, then you may need professional advice. Feel free to contact Debt Mediators if you are concerned about your finances. Our friendly consultants have helped thousands of Australians avoid bankruptcy and achieve financial freedom.