Many people have let their finances get out of control. When a tragedy or unforeseen disaster such as the recent COVID-19 occurs, they simply cannot pay their bills. They are in over their heads in debt and the situation is made worse with unforeseen circumstances.
If this sounds like your current situation, then you might start to explore the possibility of filing either a Chapter 7 or 13 bankruptcies. Bankruptcy does provide relief from overwhelming debt. Filing for Chapter 7 gives you a full release from all almost all your debts while Chapter 13 allows you to restructure your personal finances allowing you to retain certain possessions such as your home.
This is a decision that you should never take lightly. A bankruptcy will stay on your credit report from 7 to 10 years. You might not be able to open future credit accounts even with steady employment. If you do manage to secure a loan, such as an auto loan, you will face very high interest rates because you will be considered high risk.
In this article, we will explore the early warning signs of losing control of your finances. This may help you get a grasp on what is currently happening allowing you to gain the upper hand to avoid the adverse effects of bankruptcy.
Warning Signs of Personal Financial Collapse
Below are a few warning signs that indicate you might be losing control of your finances. If you can relate to any of these you will want to evaluate your money situation.
- Possessing more than three credit cards with balances on each one.
- Applying for store credit cards to obtain the initial discount.
- Having difficulty paying your bills on time.
- Must pull cash advances from a credit card to make it through the month.
- Making only minimum payments on credit cards.
- Balance transfers and refinancing are consistently needed to keep you afloat.
- Failing to build a savings account.
- Being turned down for loans or credit cards.
Paying the Mortgage and Car Payment
When you experience a financial crisis, you must always pay the mortgage first followed by the car payment. Sadly, many people choose to pay their credit cards first so they can use the little bit of credit that they gain to help make it through.
Typically, your mortgage and car payment are your largest monthly bills.
If you do not pay them on time you will quickly fall behind facing the possibility of not being able to catch up. This can lead to a snowball effect of rising quickly rising past due debt.
Are You Using a Monthly Budget?
To gain control of your finances, it’s imperative you create a budget to give you an idea of where your money is going each week.
If you put everything on paper, you will know exactly what you are spending and who the money is going to. You should categorize all your expenses by necessity then explore ways to cut your monthly bills down.
You will be surprised at the ways you can find to save money so you can pay off your creditors and avoid filing bankruptcy.
Your thinking should be “do you really need to have a to-go coffee every morning or get your nails done?”
Once you have a monthly budget outlined for the household, it is time to control what your spouse and children spend. Explain the budget to them allowing for their input. Agree on what money can and can’t be spent.
Explore a Second Job
Maybe it is time to get a second job to increase your income? You do not necessarily need another full-time job, but a second part-time income might help you gain that little edge you need to get your debts back on track.
Is Gambling a Problem?
Many people strongly deny that they may have a gambling problem. However, they spend the weekends at the casino, indulging in online gaming, buying excessive lottery tickets, at track, or even playing bingo.
Participating in gaming or general gambling is one way your money can disappear quickly. Leaving you empty handed at the end of the month when you have to cover your expenses.
If your gambling is out of control, then it is time to seek help. The only way to conquer this addiction is with support or professional assistance.
Increased Alcohol Consumption
Addiction can lead to financial hardship as well as financial hardship can lead to addiction.
Did you drink excessively prior to the debt or is the drinking a new occurrence since your finances have taken a downward turn? Either way if you have a drinking problem then you must seek help to conquer it.
During stressful times it may become easy to indulge too much to “forget” about reality however this is very dangerous not only for your health but also your wallet.
Consult With A Bankruptcy Lawyer
Ideally, you should get a handle on your finances before it is too late so you can avoid filing bankruptcy.
However, if you have no other option then you will want to learn about your options under Chapter 7 or Chapter 13 you should consult with a local attorney experienced in bankruptcy filings.
Attorney Gregory Oberhauser has helped many clients regain financial freedom, save their homes, avoid foreclosure and find peace of mind.
Contact Oberhauser Law to schedule a consultation to review your options. 978-452-1116