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3 Warning Signs That Can Lead to Bankruptcy

Millions of Americans experience economic hardship each year. You may feel as if you are one of them, constantly stressing about how to make ends meet or wondering if you’ll be able to pay back any debts that you owe.

While many struggle with this, there are some people whose cases are more extreme, and they may end up needing to file for bankruptcy.

Before you get to that point, it is important to recognize the difference between general financial hardship and a more serious case. You should be aware of some warning signs that could lead you down the road to bankruptcy.


You Experience a Significant Financial Downfall

Most people have moments in life where they are financially strapped due to overspending, preventing them from being able to pay their bills that month.

However, a financial downfall is a more severe case that could lead you to file for bankruptcy.

This could include a medical emergency/issue, a death in the family, the loss of your job, or something else that would have a huge impact on your financial situation.

Many times when people file for bankruptcy, it is after they have faced a major financial downfall like one of these.

You may have little time to adequately prepare to spend the large amounts of money, while the same amount or less money is coming in. Because the ratio of income to expenses has significantly shifted, you are unable to pay off debts, and you continue to accrue more debt as time goes on.


You Often Get Calls from Debt Collectors

Many people rely on credit cards to pay for their groceries, have a lien on their car, have a mortgage on their house, or have any combination of debts to pay on a monthly basis.

However, it may be time to seriously look at your financial situation if you continually receive calls from your creditors.

This means that you have repeatedly been unable to pay your bills and that they are past due. Debtors will generally start calling and sending mail when bills are 30 days overdue.

These collectors will be persistent and can be a source of stress and anxiety in your life if your financial situation gets to this point. Regular calls from debtors is one of the biggest warning signs that you may be heading down the road to going bankrupt.


You Use Savings/Retirement Funds to Pay Bills

A final warning sign of bankruptcy is that you are pulling from your savings, retirement funds, or other investment accounts to pay your bills.

Many investment accounts, such as your retirement, are set up so that you do not touch them until you need them later in life.

If you find yourself pulling from these “off-limits” accounts, it may be time to consider what your financial situation is truly like, and why you are having to pull from these accounts. Using off-limits money or money designed to support your life in the future is a clear indicator that your situation is unstable.

If the above issues or other significant financial strains are causing you to think about a potential bankruptcy, it is time you connect with a bankruptcy lawyer to help you understand your situation.

If you end up needing to file for bankruptcy, we can help guide you through the process, ensure your rights are protected and help keep those pesky debt collectors away.


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Should I Hire a Bankruptcy Lawyer?

It’s important to hire an experienced bankruptcy attorney when you’re considering filing for bankruptcy, or even if you are experiencing these warning signs.

This is because there are many different types of bankruptcy. Only an experienced lawyer will know which one would work best for your specific situation.

It might seem like it makes sense to do this yourself, but the reality is that most people don’t have the time or patience to understand all of the details involved in each type of bankruptcy. That means they make mistakes by not choosing the right type, or by not filling out paperwork correctly. Both things could lead to delays in your case and ultimately hurt your chances of getting any debt relief at all.

This is not a journey to take lightly, but it is also not one to take alone. If you or your business need to file for bankruptcy, reach out to us today to start your journey with us.

If you want to learn more about the options you have, call The Jax Law Center for a free consultation.


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Parker and DuFresne