What are Signs You May Be Heading to Bankruptcy?
October 26th, 2017 by Bunch & Brock
Many of those who file for bankruptcy protection in Kentucky had warning signs that they were going in the wrong direction financially. They may not have accepted their situation; or they may have hoped that somehow things would turn around. If you’re deep in debt, there’s no harm in having hope as long as you understand the reality of your situation. Getting bankruptcy protection sooner rather than later can shorten the financial trauma you’re living in and give you an opportunity to start over.
What are some of the signposts on the road to bankruptcy?
You can’t pay your rent.
Nowhere in the United States can someone working only 40 hours a week for minimum wage afford to rent a median-priced two-bedroom apartment in their local area, reports CNBC. Research by the National Low Income Housing Coalition shows that they would need to make more than twice the federal (and Kentucky) minimum wage of $7.25. The national average wage needed to afford the median-priced two-bedroom apartment is $21.21, while in Kentucky it’s $13.95.
You can’t pay your mortgage.
Owning a house comes with a lot of other costs. In addition to the mortgage, there are taxes, insurance, maintenance and repairs. You need to keep up the house to maintain its value, and you need insurance if you have a mortgage. Once the dominos start falling, the game is soon over.
You’re missing payments on your bills.
If you can’t pay your bills on time, they may snowball with fees and interest. You could lose your electric service, water or access to a phone or cable TV. If you can’t make minimum credit card payments, it’s time to seriously think about bankruptcy.
You’re getting calls and letters from debt collectors.
Debt collectors often get involved when debts are sixty to ninety days overdue.
You don’t qualify for debt management.
A credit counseling or debt management plan is a good idea for many, but it doesn’t work for everyone. These plans come into play when a company or nonprofit group helps you prioritize and pay your bills, and they talk to creditors to try to get some relief. If you don’t have assets or income, you won’t qualify for these programs.
Home equity is not an option.
A home equity loan can help you pay other kinds of higher interest debt. But if you’ve already tried this route and weren’t able to clear away that other debt, you could be in worse shape. You may now have little or no equity, and if you can’t keep up the home equity loan payments you could face foreclosure.
You have maxed out your credit cards.
Once you reached the highest balances allowed, are unable to get them increased and can’t get another type of loan, you are out of options. Another bad sign is using credit cards to pay for basics like groceries or gas due to your lack of income or high debt load.
If you have fallen down a financial slippery slope, bankruptcy can be a way to get you back to daylight. If you are dealing with these kinds of issues, you need to seriously think about how bankruptcy can help you and your family.
The attorneys at Bunch & Brock have been serving our community and the entire state of Kentucky for more than 35 years. Working out of our Lexington offices, we don’t just serve the community – we are members of it, and we look forward to helping our neighbors when they need us. If you have legal questions or would like to set up an appointment, contact us online or call us at 859.254.5522.