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Am I Going Bankrupt? 5 Common Warning Signs You Should Look For

Posted on by Ben Hartwig in LawFebruary 11, 2022

Despite the common belief that corporations file most bankruptcies, 97% of all bankruptcies are filed by individuals. Bankruptcy is a very real threat to your financial well-being and can destroy your credit rating for years. The best course of action is to be proactive: you can avoid filing for bankruptcy and save your credit by looking for these warning signs.

5 Common Warning Signs that Can Lead to Bankruptcy

While there are many indicators of wavering financial stability, some behaviors are strong predictors of future bankruptcy. Here are five signs that indicate you may need to adjust your fiscal behavior.

Bankruptcy Warning Signs

1. Getting Calls From Debt Collectors

While you may be in the habit of ignoring calls, that won’t stop debt collectors from ringing you at all hours. Once debt collection agencies have acquired your debt, they will stop at nothing to collect on that investment. While the Fair Debt Collection Practices Act prevents collectors from harassing you unnecessarily, many agencies are experts at skirting that legal line.

The standard period for lenders to hold onto unpaid debt is between 30 and 180 days. The best action you can take is to pay off any debts within this time. If this has passed, the bill has already gone to collections; avoiding the calls won’t help. Those bills can rack up interest and wreak havoc on your credit. The only thing you can do is talk with the agent and make a payment plan that fits your current finances. Otherwise, bankruptcy may be unavoidable.

2. Using Credit Cards To Pay For Unexpected Expenses

Unplanned expenditures happen, and an emergency can incur thousands in sudden expenses. These expenses can include:

● Loss of Employment

● Unexpected But Necessary Travel

● Home Repairs

● Medical Emergencies

● Moving Expenses

● Family Emergency

In these cases, your emergency savings may be drained. But what if you don’t have an emergency fund? For many, credit cards may be their only option. Unfortunately, this is not a viable strategy for improving your finances. Credit card debt accrues interest and directly impacts your credit rating. Late payments and high credit utilization weigh heavily on your credit score and make future interest rates even higher.

3. Missing Necessary Payments Due To A Lack Of Funds

The root cause of bankruptcy is a lack of funds, and being behind on payments is a sign your bank accounts are draining. Often, these expenditures are not a surprise but telegraphed far in the future: expenses like a regularly scheduled doctor’s visit, long overdue house repairs, or periodic vehicle maintenance. Unlike emergency expenses, you’ve known about the need for these costs ahead of time.

If you don’t have the money for essential payments, it may be time to look at your budget. See where your cash is flowing, and try to cover the necessary expenses first. If not, you may find yourself filing for a chapter 11 sooner rather than later.

4. Maxing Out Your Credit Card

No matter your financial situation, certain day-to-day expenditures need to be made. Food, gas, and other essentials are often put on credit cards without a second thought. But high credit card utilization is a strong indicator of oncoming bankruptcy.

Once you hit the maximum spending limit on a card, you may not be able to get those limits increased further. Maxing out your cards also means getting approved for loans will be difficult, creating a financial cliff. With no money to make payments, and no way to get more money from loans, filing for bankruptcy may be your only option.

5. Can’t Recover After A Major Financial Loss

Divorce, a large medical bill, a terrible investment; significant financial losses happen. The issue comes when you don’t have the funds to carry you through. With 25% of Americans saying they don’t have any savings at all, this situation is not uncommon.

Without a recovery plan, or the ability to bring in more capital, your debt may be piling up. Unfortunately, bankruptcy is often the only way for people to get out from under that crushing debt.

How Can Someone Determine If a Party has Filed for Bankruptcy?

How easy is it to see if someone has filed for bankruptcy? While you think records may be difficult to acquire, nothing could be further from the truth. Bankruptcy records can be searched by advanced data-fetching software, often for a very low cost. These bankruptcy records reports can yield a variety of information, including:

➢ Case Number

➢ Case Details

➢ Filing State

➢ Date of Bankruptcy

➢ Bankruptcy Type

➢ Filing State

➢ Judgments

➢ Liens

➢ Assets

➢ And More

How Can Someone Determine If a Party has Filed for Bankruptcy?

Will Your Bankruptcy Be Public Knowledge?

Yes, your bankruptcy will be public knowledge. Using this same search functionality, anyone who wishes to look at your bankruptcy records can do so for a nominal fee. This means that potential landlords, creditors, and even friends and family can find this information. To see what information about you is available to the public, you can use a public records search for as little as $1.50 per search. Beyond just bankruptcy, people may be able to see:

➢ Current & Past Addresses

➢ Phone Number(s)

➢ Email Address(es)

➢ Social & Web Accounts

➢ Images & Videos

➢ Relatives & Relationships

➢ Arrest Records

➢ Criminal Records

➢ Traffic Violations

➢ Bankruptcy Filings

➢ Judgments & Liens

➢ Property and Asset Records

➢ Unclaimed Funds

➢ Vital Records

➢ Professional Licenses

➢ Political Contributions

➢ Employment & Education

➢ And More

Bankruptcy Can Be Avoided By Improving Financial Habits

It can be hard to keep up with everything going on in your life, and budgeting is tricky. But taking the time to observe your financial behavior and watch for warning signs is essential; Avoiding unnecessary expenditures, keeping an eye on your credit, and saving as much as you can are significant steps to improving your finances. By doing so, you can avoid bankruptcy and maintain sound fiscal health.

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