Personal Bankruptcy - Are You Headed Toward Too Much Debt?
By Matt Hick
Not everyone who files for bankruptcy is a deadbeat. Sometimes simple bad luck or poor choices is the overriding factor in piling on more debt than you can handle. A lost job; a severe illness; and yes, overspending can all lead you on the long road of too much debt that can ultimately leave you struggling to survive and a need to file bankruptcy in order to make a fresh start.
Think you may be headed toward bankruptcy? Look for these warning signs to get control over your finances before it's too late:
Warning Sign #1: Too Much Credit Card Debt.
Credit cards debt is the biggest financial disease striking American households today. With the average credit card debt now toppling $10,000 or more, it's no wonder that today's consumer is feeling the pinch. No one should ever charge more than 40% of their current credit limit on any charge card, and if you're only able to make the minimum payment on your current income, it's time to put those credit cards away!
Warning Sign #2: Overusing Home Equity Lines of Credit.
It can be awfully tempting to use your home equity line of credit to finance that new furniture or a better car. Avoid the temptation. Remember, your house is at stake! Any type of credit that uses your home as collateral is dangerous. Use it only in severe emergencies or to cover unexpected maintenance costs and the occasional remodeling project. Something many people forget: those payments are linked to the current interest rate. If rates go up, so do your payments! Be sure that you can handle any increases that may come your way.
Warning Sign #3: Living Paycheck to Paycheck.
While it may not be possible to stop living form paycheck to paycheck, keep in mind that any bump in your financial road could send you crashing. The average American household has less than $1,000 in savings, leaving them open to financial ruin in the event of a sudden layoff, illness, or other major catastrophe. Do your best to live under your means in order to save for those unexpected emergencies that can devastate your finances.
Warning Sign #4: Foreclosures & Repossessions.
Let's face it, if the bank is ready to foreclose on your house, and the repo man is about to which your car away, you're already in serious financial trouble, and bankruptcy may be just around the corner. Now's the time to get some help from a credit service to gain better control of your financial life and avoid more serious consequences.
Warning Sign #5: Co-Signing on a Loan.
It's sad but true; bankruptcy often follows good intent. Be extremely careful when trying to help out someone else by co-signing on any type of loan. Be sure that you can handle those payments if your friend or relative fails to pay. It isn't uncommon for co-signers for other's mortgages and car loans to lose their own home when they are unable to repay a defaulted loan. Bankruptcy is nasty business. Be sure if it happens it's because of your own mistakes and not someone else's.
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