Red flags that may indicate financial distress ahead
Sometimes, the debt problems that can lead to bankruptcy seem to appear out of nowhere. A sudden illness, unexpected job loss or serious accident can be enough to tip the scales from financial stability to financial distress within a relatively short time frame. In other cases, however, money problems build up so gradually over months and years that it can be easy to overlook the seriousness of the situation until a collections lawsuit, foreclosure notice or other major financial setback brings it into sharper focus. To prevent this from happening to you, keep an eye out for some potential warning signs of serious financial distress.
Paying bills late
If you find that you are racking up a lot of late fees, it may be an indicator that your finances are getting out of control. Whether you are late because you cannot afford to make payments on time, or simply because you often forget, this situation does not bode well for your overall financial health.
Not only does paying your bills late cost you more in the form of late fees, but it can also take a toll on your credit score in the long term. This means you may have difficulty getting a loan at an affordable interest rate.
Another red flag to watch out for is relying too heavily on future windfalls in your financial planning. If you find yourself spending your tax return before it arrives, for instance, it may be time to take a step back and re-evaluate your financial situation. Similarly, if you are counting on an inheritance or profits from the sale of a home or business to support yourself later on down the road, you could be setting yourself up for disaster if those things do not materialize in the ways that you expect them to.
Nothing in savings
It can be hard to prioritize savings when there are so many other demands on your finances, but it is important to have some funds set aside for unexpected expenses such as home or car repairs, job loss or unexpected illness. If you anticipate relying on credit cards in the event that these circumstances should arise, it may be a sign that you are on unsteady footing. Without a rainy day fund, a single stroke of bad luck may be enough to send your finances into a spiral.
Help is available for debt problems
If you are struggling with debts that exceed your ability to pay, it may be time to get help turning the situation around. Depending on the circumstances, bankruptcy may be an appropriate option to help you eliminate debts and make a clean start. Wondering what this means for you and your situation? Call us today at 203-594-6655. We can answer your questions. At 203-594-6655 we have years of experience helping clients through complicated and stressful financial situations.