November 2, 2022

5 Bankruptcy Signs You Should Know

Bankruptcy is a legal process that is used when a business or person can’t pay back the money they owe to a lender. Often, the process starts with an appeal by the debtors.

It is always the last option for groups that are struggling to keep going when money is tight. Most people avoid it at all costs and trust that it will never catch up with them.

Find out what the five bankruptcy signs are that you should know about.

Warnings Signs that can lead to Bankruptcy

It’s possible to teeter towards bankruptcy without even knowing it. Here are the tell-tale signs you’re about to go bankrupt.

1. Repeatedly spending more money than you earn.

Most people are forced to file bankruptcy due to job loss, divorce, or underinsured or uninsured medical coverage, while others mismanage their cashflows. If you think you manage your cash well, list all your living expenses and compare them to your bank statement and credit card payments. You have to manage your expenditures or make enough money if they add up.

If you are over budget, trim your expenses. If you don’t come up with a solution now, you will have credit card balances that you can’t pay, forcing you into bankruptcy.

2. Suspend important payments due to lack of money.

If you find yourself delaying payments month after month, not saving any cash for emergencies, or spending more than you earn, that’s a sign you’re teetering on bankruptcy. Many people are forced to file for bankruptcy when they’re divorced, lose their job, or are faced with an underinsured medical emergency. For some, it’s outright financial mismanagement that leads to their downfall.

If you find yourself in this situation, sit down with your credit card statements, bills, and bank account payments and make a list of everything you spend each month. Add up all expenses and find out whether they exceed your monthly income. If the expenses exceed the income, you can either cut down your expenditures or look for ways of raising your income.

3. Always troubled over money

A lot of people rate financial problems as the #1 most stressful thing in life. Financial problems can cause long-term stress, which can lead to health problems like high blood pressure, heart disease, stroke, and even a heart attack. In such cases, health problems are not far off either.

Those plagued by financial problems may also experience bouts of depression, anxiety, and personality disorders. When these persist, a person’s quality of life can deteriorate. If you’re not neck-deep in debt, talk to a bankruptcy attorney to explore your options. Filing for bankruptcy can help ease the burden on unsecured debt, though your credit score will take a serious hit.

4. Use of credit cards to cover crises.

Do you always find yourself paying for emergencies with credit cards? That’s another sign that you’re walking down the path of bankruptcy. With many banks dangling credit cards, it’s easy to fall into the credit card trap. Some people start with one card, then find they can get a second, third, or even multiple cards.

Credit cards are useful in some situations, but not in the long term due to the high-interest rates they attract. If you’ve cut down your expenses or increased your disposable income, pay off any credit cards, then create an emergency savings account.

5. No extra cash for leisure.

Money helps fund your lifestyle and keeps you going. If you’re unable to spend money on your hobbies, go on vacation, or other social events, that’s another sign you’re heading down the road of bankruptcy. It’s likely you’re overspending or don’t earn enough income.

Try to reduce your monthly expenses where possible and find ways to increase your income. It also helps to create an emergency savings account, so you won’t waste money repaying credit card interest. Ultimately, you can use the money that you would have paid on your credit card for leisure.

How To File for Bankruptcy in Media, PA

If the above bankruptcy warning signs apply to you, it’s time to act to bring the debt situation under control. Here’s what to do next.

1. Gather Financial Records

Record all your assets, liabilities, and income. Having your records handy will help you build a strong case in court if the creditors decide to litigate.

2. Obtain Credit Counselling within 180 days

Next, go for credit counseling before filing for bankruptcy. There’s a window of 180 days to do this. If you complete the process, you will receive a credit counseling certificate.

3. Petition Filling

Hire a bankruptcy lawyer to petition in court because ordinary people aren’t allowed to do so. Federal and bankruptcy laws are essential in each case and need an expert. Remember, judges and court employees are not allowed to give legal advice.

4. Creditors Meeting

Your bankruptcy lawyer will organize a meeting with your creditors.

Different Types of Bankruptcy

The following are different classes of bankruptcy.

  • Chapter 7: It is when the appointed court trustee sells your assets, and the income from the sale is used to repay your creditors.
  • Chapter 9:  In this type, creditors and municipalities come to an amicable understanding of how the debt will be settled.
  • Chapter 11: It is also known as “reorganization bankruptcy.” A debtor suggests a repayment plan to keep the business alive over a certain period.
  • Chapter 13: A wage earner bankruptcy is where a debtor has more property and repays the creditors over time.

Looking for an Experienced Bankruptcy Lawyer? Contact Michael Alans Siddons. Contact us today

If you find yourself in a dire financial situation, the right thing is to contact a bankruptcy lawyer today. The Law Offices of Michael Alan Siddons has an experienced lawyer who can help you navigate bankruptcy and maintain your dignity while working out a debt management plan. Don’t let your financial downfall or situation cause sleepless nights. We can help you find a solution and protect your rights.

Our dedicated bankruptcy lawyer will walk you through your financial hardship. They will help you unshackle yourself from creditors and ensure you have a fresh financial start. Call (610) 255-7500 for a free consultation with our bankruptcy lawyer today.