Warning Signs You Are Headed for Bankruptcy

There are warning signs that you are headed for serious financial difficulties, which ultimately can end in bankruptcy. They are easy to spot, although many people choose to ignore the signs and steam headlong into IVA’s or bankruptcy. By learning to recognise that you are headed for trouble and putting on the spending brakes a little earlier could help to avoid being declared bankrupt

The signs that you are headed for bankruptcy are:

You have Maxed Out All your Credit Cards – and the chances are that you have several

Debts from unpaid credit card bills are the main reason for people declaring bankruptcy or filing for IVAs. The best way to avoid this scenario is to make sure that you never spend more than half of the available credit on a card. Even if you know you can pay it back because you are expecting a cheque or pay rise, things happen and you may not be able to pay back the debt. If you can, cancel all your credit cards and only buy things you have the money for.

Paying Back the Minimum Amount

If you have a credit card you probably recognise this scenario. You get the bill and you only pay the minimum amount asked for. This is a big mistake as by doing this you are paying incredible amounts of money out in interest alone. Most people don’t realise that if they only pay back the minimum it will take them over 30 years to pay back the debt in full. Try to spend only what you can afford to pay back in one go, thus avoiding interest payments altogether.

No Savings

This may sound out of place but if you have no emergency money available for life’s little surprises you are more likely to borrow money you can’t afford to pay back. Try to make a rainy day account.

Repossession

If you are about to have your car or home repossessed this is a big sign that you are living outside of your means. Now is the time to get serious financial help in order to avio0d falling into the black hole of bankruptcy and court proceedings.

Student Loans

Many students are having to borrow huge amounts of money to pay for their education, but by not keeping track on their repayments or having a part-time job to help pay for their books and accommodation many are falling into the debt trap. Most students leave with loans in the region of £20 -30,000 pounds. The bad news is that these debts are exempt from bankruptcy leaving the student with crippling repayments despite their financial hardships.

Below is a small checklist below to help you avoid financial problems:

• Cancel your credit cards.
• Don’t buy what you don’t need.
• Don’t stretch yourself to get on the property ladder.
• Work out a comfortable budget and stick to it.
• Never co-sign loans or agreements for others – even partners.
• Avoid loans and home equity schemes.
• Make sure you have adequate insurance on your home, life and possessions.
• Have an emergency fund set aside.

Remember, bankruptcy can happen to anyone. By following a few simple guidelines you can help to ensure you are not another statistic in next year’s figures.