Bankruptcy : How to Recognize The Warning Signs

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The effects of bankruptcy are far more than just on credit reports, but there come times when being bankrupt become the only respite to get relief from all debts and unmanageable financial burdens. The United States have been victimized by the pangs of national debts since a long time and the US citizens too could not escape unhindered by this national financial crisis. However, the case of personal or individual debt is completely different from the national front, as these particular situations of debts and personal bankruptcy are generally prompted by individual or personal financial actions and decisions. The thought of filing bankruptcy stir up the most horrible nightmares in our life and thus we want to banish these two words from our dictionary forever. But the same cannot be possible unless we gather the right kind of information and outlook towards bankruptcy and without getting updated about the new bankruptcy laws which prohibits us from filing for bankruptcy except under certain eligibility criteria. Apart from that you should also be aware of the warning signs that spell the impending financial crisis that ultimately leads to bankruptcy filing. For instance, your absence of adequate health insurance or coverage plays a major role in leading to bankruptcy. Apart from that, charging on your Credit Cards more than you can pay off each month is an unhealthy symptom of bankruptcy. If you are extravagant and thoughtless about usage of Credit Cards and give in to impulsive expenditures, be assured that you are heading towards bankruptcy faster than you know. One should not use more than 30-40% of the available credit at one time. This provides you compensation during emergency situations in the future like illness, joblessness, divorce, education, loans etc. If you over use your home equity fund or line of credit for other less important items than home improvement, know that this is a symptom of bankruptcy, if you can’t make the payments comfortable later on.

Lack of emergency funds implies the risk of bankruptcy, if you depend only on the time-bound paychecks without or with very little savings of your own. According to a shocking statistics, 43% of American household have less than $1,000 savings. In case you are making the minimum payments for your credit card dues and are planning to continue the same act, make sure to face the financial troubles later on due to the insurmountable interest rates and other late fees. Hence, unwise and casual use of credit card remains of the major reason for filing bankruptcy. The troubles of bankruptcy are sometimes invited by co-signing a financial bond or loan for someone else as when the person co-signed for fails to make loan payments, the other party is held responsible by the lender for paying off the debts. And at times, student loans also lead to bankruptcy on failure to pay back the same to the bank or the lender.

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