Many people assume that those who file for bankruptcy mismanage their finances or simply are not responsible with their money. While this is sometimes the case, filing for bankruptcy may also be the result of a health crisis, a divorce, a death, or another life-changing event. If you are currently going through financial hardship, make sure you are aware of the warning signs and feel free to contact our bankruptcy lawyers in Rockford, Il with any questions you may have.
Maxed Out Credit Cards
It is tempting to use credit cards to extend your income, but this is a slippery slope that can result in eventually filing for bankruptcy. Only put charges on your credit card that you know you will be able to pay off every month. This will help improve your credit score as well, setting you up for financial success in the future.
Late or Missing Payments
Consistent late or missing payments on bills may be the result of disorganization or the fact that you simply cannot afford to pay them. As soon as this begins to happen, look at your spending habits and adjust accordingly so that you are in a better financial position for the following month. The key word here being adjusted. It is important to understand when a real financial issue is looming and how to manage the issue before it leads to bankruptcy. Maybe this means not going out with your loved ones and friends for a few weeks. Maybe this means finding a cheaper option for food, such as purchasing groceries instead of eating out. In most cases, people can find a way to cut back and make room for monthly payments, if they’re willing to try hard enough.
Only Making the Minimum Payment
If you only pay the minimum amount due on your credit card every month, it can result in years of catching up to pay off the debt. Plus, this is an easy way to accumulate interest. This also applies to any financing options you may have taken on. It is common for people to take out loans for furniture or other necessities at 0% interest for 12 or 24 months. The minimum payments on these loans will never equal a full payment over that period of time. After that time is up, huge interest rates typically take over and you may find yourself in an ever steepening hole. Always be sure to do your homework when taking out a loan of any kind.
Filing for bankruptcy is a personal decision that can be intimidating if you don’t fully understand the process. Our bankruptcy lawyers in Rockford, Il can help you through every step of the process. Please contact us today to get started!
