Am I Heading Towards Bankruptcy?

In the United States, bankruptcy is becoming a reality for many good people. There has been something of a misconception regarding bankruptcy, as many people seem to think that only financial do-nothings have to go through it. If the last few years have taught us anything, it’s that this clearly isn’t true. It can happen to just about anyone these days, including the Average Joe living on Easy Street. In this article, we will address some warning signs that might cause you to head towards bankruptcy in the near future.

Sign #1 – You lack adequate health insurance coverage for either yourself or your family.

Recent statistics show that when you live without health insurance, you are taking a huge risk. Nearly one in every five bankruptcies is caused, either in full or in part, by medical bills. With the rising cost of healthcare in the United States, it’s important to protect yourself against unforeseen medical emergencies.

Sign #2 – You are reaching the max on each of your credit cards each month.

Most bankruptcy cases are caused in some part by credit card situations. Consumers often take on too much bad credit card debt because they are trying to buy things that they cannot afford. If you find yourself in credit card debt, then bankruptcy is something that might be on the horizon. If you want to stay in good standing in this regard, then you shouldn’t be spending more than 35% of your available credit each month. This is also important because it will give you some flexibility in your finances in the case of any emergencies.

Sign #3 – Overuse of your home loan.

You shouldn’t just be throwing around the equity in your home just because you can. That home equity line of credit is very important to your financial well being, so you have to be careful when you use it. Most of the time, the only purchases that should be made with these funds are those which add more value to the home. If you start using that equity, you are draining one of your best financial resources.

Sign #4 – You don’t have an emergency source of money.

People who depend on each paycheck to get by are living on the edge. You never want to be in a situation where one emergency wipes you out. Almost half of American families $1,000 or less saved for emergencies, so this is a real problem for many people. You have to make sure that you don’t fall into this category. Save enough money so that you won’t struggle with your finances through emergencies.

Sign #5 – You keep paying the minimum on your credit card accounts.

If you are only paying the minimum on your cards, it will take you years to pay off that balance. This is not a good financial plan in any way. This means that you have probably been buying things that you really could not afford. In the end, you will be better off just staying within your means. 

If these warning signs sound like they’ve come from your situation, then something has to be done. If not, you could join the thousands of Americans who have to declare bankruptcy to save their rumps.