What Is The Significance Of Bankruptcy For Someone In Financial Turmoil?

If you’re concerned with bankruptcy, if you’re wondering about your financial situation, then that alone is an early warning sign that maybe bankruptcy is something that you should start considering. The point is if you are getting more in debt instead of getting more out of debt, then you’re headed in the wrong direction.

Unless there is something that is going to change, like if you’re in school and you’re expecting to get out of school and you’re going to be getting a job and making more money, then maybe it’s not something that you need to worry about right now. But if you’re just going along in your regular life and you don’t expect any changes to occur in your income, then you’re in denial if you’re thinking that you’re just going to keep all of your money and eventually, somehow you’re going to pay it all off.

If you start incurring more debt each month instead of getting out of debt a little more each month, then it’s time to go talk to a bankruptcy lawyer. It might not be time for you to file bankruptcy but a bankruptcy lawyer can help you plan things out to know where you stand and to know what time it is right for you to actually do that.

Does Losing A Job Eventually Lead to Filing for Bankruptcy?

The top three reasons that people finally file bankruptcy is they lose a job, they get a wage garnishment, or they have a medical problem and medical bills. The reason that happens is because these are people who are kind of close to the edge.

A lot of my clients have been close to the edge for a long time and they are taking on more debt instead of getting rid of debt and they are spending more than they are making. They are slowly heading into a bankruptcy situation and then if something like that happens, it’s a catalyzing event that severely hampers their income and that forces them to have to consider filing bankruptcy.

It’s an unfortunate situation in the sense that a lot of these people could have been helped a lot more by considering bankruptcy earlier on but if you didn’t do that and you are where you are and my job is to help you out and not to tell you that you should have considered it earlier but job loss is definitely one of the top reasons why people come to see me.

Don’t People Realize that Something is Amiss When their Expenses Exceed Their Income?

Yes, absolutely, because that happens when you get to the end of the month or the end of your pay period and it’s time to buy groceries or something like that and you spend a little more than you thought you did and so you’re not having enough in your bank account to buy the groceries. What does everybody do? Most people are going to go out and use their credit card.

Now, that’s okay if you then can pay for it by the end of the month at the end of the bill cycle, but if you then are not making enough money to pay that off and you keep doing that over and over again, it may creep up and you may not realize that that’s happening.

At first, you may not think too much about it, “I bought some groceries for a couple of hundred dollars and I never paid that off. Is that a bad sign?”  Well, what happens is that people will do that for a few months and then, all of a sudden, they reach the credit limit on their credit card and they can’t do it anymore. That forces them to realize that they are in trouble because now they are spending too much, they don’t have enough money to meet their basic needs and expenses and groceries or utilities or something like that.

They have also used above their credit, so they don’t have any way to get by immediately.  So, a lot of times people will realize not until they hit the credit limit but the point is, if you are not getting out of debt each month or you are instead getting further in debt and that is a bad thing, then you need to consider your situation.

Can People Find Themselves in Financial Trouble Without Even Realizing It?

There are all different kinds of situations. Some people hit the need for bankruptcy gradually over time, over a long struggle, slowly getting more and more into debt. Other people have something happen to throw them off. If you lose your job and you are unable to get a new job quickly, then that’s going to throw 90% of Americans into a financial crisis because there are just a lot of people that don’t have enough savings to carry them through that long of a time period. If you have something like that happen, yes, it can definitely come up all of a sudden out of nowhere.

For more information on Significance of Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (801) 441-2013 today.

By Court Koehler

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