We know that the major reasons many people find themselves mired in a vicious cycle of debt are often related to circumstances beyond their control.
In fact‚ Bankrate.com lists some of the top causes of bankruptcy as: reduced income‚ divorce‚ underemployment‚ medical expenses and a lack of savings.
Los Angeles Chapter 7 bankruptcy lawyers know‚ too‚ that all too often‚ many people fail to see the warning signs that they’re in trouble. Either they honestly believe they can continue to make payments‚ tread water and eventually get ahead‚ or it’s a case of willful blindness – not wanting to admit there is a problem.
But just like anything else‚ admitting there is a problem is the first step toward resolving it. Bankruptcy grants you the power to deal with unmanageable or snowballing debt. In deciding whether you should initiate the process‚ you may want to consider a few indications that your debt has become unmanageable.
Early on‚ some of these indicators are:
1. You make minimum payments. This is relevant to all your bills‚ but particularly for credit cards. Unless this is a finite situation and you plan to up your payments again in a few months‚ this is considered a huge red flag.
2. You have no savings cushion. Generally‚ it’s advisable to have about three to six months worth of money to live off of‚ should you run into some unexpected trouble. Not having this amount puts you in a potentially precarious financial situation should you fall ill or lose your job.
3. You have a credit card balance that consumes more than 10 percent of your income. For example‚ if you owe more than $5‚000 and you make $50‚000‚ this is generally not a good sign. This alone wouldn’t be reason enough to consider filing for bankruptcy‚ but it puts you in a poor position to make expedited payments.
The above examples in and of themselves can likely be corrected with some budget planning. However‚ sometimes there are signs that you have actually waited more than long enough to file for bankruptcy. Some of those warning signs include:
1. You use credit cards to pay for essential items. It’s one thing to use a credit card to cover an unexpected medical bill that you intend to pay off in a few months. It’s another issue entirely if you’re using your credit card to pay for groceries‚ rent or car payments – items you should already have covered in your monthly budget. Particularly if you begin to reach your credit limit‚ you should be alarmed.
2. You have multiple debt collectors hounding you. This happens when you don’t fulfill your debt obligations‚ and those debts get turned over to collection agencies. If the calls have become relentless‚ you need to know that you can request that they stop‚ but it won’t solve the underlying problems.
3. The quality of your work or personal relationships has taken a hit because you aren’t sleeping well or have turned to alcohol or narcotics to help cope with the stress. The desire to escape is understandable‚ but now is not the time to risk losing your job or your emotional support. You do have other options.
If you are considering filing for a Chapter 7 bankruptcy in Los Angeles‚ contact Cal West Law to schedule your free consultation. Call (818) 446-1334.