When you’re faced with overwhelming debt, bankruptcy can be an invaluable tool for helping you get your head above rough financial waters. That said, it’s even better if you’re able to avoid financial troubles altogether. A bankruptcy filing can take time and, yes, money. If you’re able to recognize some of the early warning signs that you could be headed toward bankruptcy, you might be able to get a handle on your debt before things spin beyond your control.
1. You have substantial credit card debt
Credit card debt is where many people first experience financial trouble. Americans kicked off 2020 owing more than $1 trillion in credit card debt. If you’re carrying a balance, you have a lot of company. Credit card debt is troublesome because it’s easy for your balance to skyrocket, especially if you’re only making the minimum payment. If you seem to be falling further and further behind on your credit card payments, you should take steps to address the problem as soon as possible.
2. You don’t follow a budget
Like most things that are good for you, budgets are boring, and they take time to set up. However, they are also essential to maintaining your financial health. Understanding what your monthly income is and where it goes can help you address potential problems quickly. If you’re spending money freely without a care in the world, you could find yourself up to your neck in debt faster than you may think.
3. You have little set aside for emergencies
If anything, 2020 has shown us that we have little control over our lives. A sudden job loss or a medical emergency could quickly wipe out your finances, especially if you don’t have significant savings. It’s important to set aside what you can should you ever experience something unforeseen.
Despite your best efforts, you may still find yourself facing a mountain of debt. If this is the case, don’t despair. Filing for bankruptcy protection can help you get the lasting relief you need. You should work closely with a skilled legal professional who can help determine the best option for you.