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10 signs you are heading for bankruptcy

When a bankruptcy is filed, it begins with the bankruptcy court entering an order for relief. There is a reason it is called that. Nobody wants to file for bankruptcy, but sometimes it is the only way to get relief from crushing debt.

Most clients who end up filing for  bankruptcy, however, would never have thought they were going to file. Here are some signs that you may be on the path to bankruptcy, according to a report by

Your credit cards balances are near their limits: If you find your credit cards are all about to hit their limit, that is a sign that something is wrong.You have no way to save: Whether it is for a rainy day, a vacation fund, just in case, or for retirement, we all want to save money. If you find that you have to stop contributing to your retirement account, or are unable to save any money each month, that is a sign that your finances may be in trouble. Debt shouldn’t swallow up so much of your income that nothing is left for savings,You are unable to earn enough to pay down debt: If you find yourself unable to make any meaningful dent in your balances, that is not a good sign. Credit cards can be a very useful tool. They can also spiral out of control. If you find that the minimum costs each month to maintain the balances is all you can afford, the first step is trying to lean down your monthly budget. You can also try to work overtime. If after leaning down your monthly budget or trying to add overtime you still can’t get any traction paying down debt, then you may have reached a point where it is no longer realistic to ever get out from under your debt without bankruptcy.You forego needed items to keep up with your debt: Not going shopping as often, or not buying the newest smartphone is not a problem. Those things are all part of smart money management. If you find yourself foregoing necessary items however, such as health insurance coverage, or vehicle repairs, then there may be a problem. When you are skipping on necessities to keep up with debt, that is not a good sign.You are taking out loans against retirement accounts or life insurance policies to stay current on debt: Raiding your retirement account to try to finally get a hold of debt is never a good idea. Retirement account loans may seem like a solution, but they come with large monthly payments that get automatically deducted right out of your pay cheque. Almost always the retirement account loan is a precursor to being right back where you were, but this time with the added problem of a large retirement account loan payment.Despite balancing payments, you can’t seem to get new credit any more: If you are current on payments but you still can’t seem to get approved for anything, it is probably because your overall debt load is so high that you look like a big risk to lenders. When they see your debt, they know that the odds of paying it back are not good.Robbing Peter to pay Paul: If you find yourself borrowing from one creditor to make payments on another that’s a sign of a serious cash flow problem. The worst version of this is when people alter their income tax deductions and reduce the amount of income tax deducted from their pay cheques to have a larger amount available each month. That decision always catches up with them when it is tax time. The end result is you probably still owe the other creditors but now you have added one of the most difficult debts to get rid of and one of the most powerful creditors out there.Your bank account goes negative during a month: Your bank account shouldn’t be going negative. If you find that you are bouncing payments and keep going negative before that next pay cheque, that is a strong sign that the current plan is not working and that bankruptcy is likely on the horizon.You are behind on your home or vehicle loan: Homes and cars are priorities one and two. A home is most people’s largest lifetime investment and it is the place their family lives. People don’t go into default on their mortgage unless the situation is dire. Similarly, without a car, you can’t get to work. If you are in default on your mortgage or car loan, you are past the point where you need to call a bankruptcy attorney.Creditors are calling and sending letters, or have sued you: Once you are far enough in default that you are being hounded by creditors, it is undoubtedly bankruptcy time. Debt collection starts a cycle that is nearly impossible to get rid of. Creditors calling incessantly and sending harassing letters means things have reached a breaking point. Eventually they will sue and you will face garnishment or levy. If you are at this stage, it is time to get relief – by calling a bankruptcy attorney to see about your bankruptcy options.