Warning Signs You Are Headed for Bankruptcy


A man holding an empty wallet.


Bankruptcy is something no one plans on doing. Bankruptcy is often a last resort for those who are struggling financially. The prospect of actually having to file is so daunting that many people will go to great lengths to avoid it. However, people of all socioeconomic backgrounds experience this for many different reasons. All of them want relief, and that’s the one thing they have in common. Bankruptcy is not a failure but a way to help those who need it the most. The reason might be something beyond your control, like losing your job or getting into an accident. Since no two are alike, you can’t use a one-size-fits-all strategy for bankruptcy cases. Without much further ado, here are the warning signs you are headed for bankruptcy.


You’ve fallen behind on your financial obligations

That’s the barest minimum of an indicator, really. If you’re having trouble meeting your repayment obligations, it might indicate your debt load is excessive. It’s a significant problem if it prevents you from meeting essential obligations, such as a mortgage or car loan payment. Credit card statements serve as another barometer. Be careful if you can’t afford the bare minimum in monthly payments.

Debt collectors are constantly contacting you

Many people have resorted to using credit cards to cover everyday expenses like grocery shopping, and many others have a mortgage or auto loan that must be paid monthly. But if debt collectors are continuously calling, it may be time to assess your financial situation more closely. This means that you have fallen behind on your bills more than once and are now past due. It is common practice for debtors to initiate communication and send letters once bills are 30 days past due.

If your financial situation does get to that point, you should expect these debt collectors to be relentless and a source of stress. Receiving calls from creditors over and over is one of the most unmistakable signs you are headed for bankruptcy.

You can’t afford any extras right now

You need money for the bare necessities of life: food, shelter, and transportation. Think about your present way of life. Can you spare cash for fun activities, hobbies, vacations, and celebrations? It’s a sign that you’re either spending too much or not making enough money if you don’t have any spare cash for fun activities. Will you add it if you take a trip or buy a used convertible?

You may save money on credit card interest by reducing your monthly expenses, increasing your income, and opening an emergency savings account. Instead of making that credit card payment, why not treat yourself with the cash you would have used?

A man holding a blue credit card.

You have no more home equity loan choices

Utilizing the proceeds from a home equity loan to settle high-interest debt, such as credit card balances, is possible. Paying off credit cards and never using them again is the key. It’s possible that your financial condition might worsen if you use your home equity to pay off other bills instead. According to experts from, one out of every three American households does not own their own home, and homeowners with negative equity cannot qualify for a home equity loan.

Being a loan guarantor

It’s bad enough to have to cope with debt commitments without risking bankruptcy because of someone else’s irresponsibility. When the individual you co-signed a loan with fails to make their loan payments, the lender might come after you for the money. This is a common cause of bankruptcy. It’s important to consider the many consequences of agreeing to act as a guarantor. Be sure to think through all of the implications of your decision, even if the recipient is a loved one or close acquaintance.

You can’t get back on your feet after suffering a major financial loss

According to a poll by the Financial Industry Regulatory Authority, over two-fifths of Americans do not have the means to come up with even $2,200 in a month in the event of an unexpected financial emergency. This is why unexpected medical bills, a divorce, the loss of one’s career, or any other devastating financial blows may push people over the edge into bankruptcy. It’s smarter to be ready for an emergency than to try to deal with one after it happens.

A person with cash and a calculator app on a smartphone.


You no longer return calls or open mail

Another one of the signs you are headed for bankruptcy is that you’re unwilling to return calls and mail. Don’t put off dealing with your bills any longer, especially if you’ve been afraid to pick up the phone or open the mail because of harassing debt collector calls. Don’t make common mistakes before filing for bankruptcy because you’re ignoring your collectors. Paying off your debts is a priority.


Unread 20 email notifications on a smartphone.

You’ve become irritable and awkward in social situations

Financial problems can make individuals irritable and short with others, but this is often overlooked. In addition, they stop “going out” and interacting with others because they are worried about contributing what they should. As no one wants others to think less of them because of their financial situation, some people go into hiding when times are tough. It’s time to do something about it if financial troubles have caused you to change.

In conclusion

Some signs you are headed for bankruptcy include the following: If you find yourself over your head with debt and have decided to hire a bankruptcy attorney (often the best option), you will need to perform some serious homework before making your final pick. First, be sure the attorney has the experience, especially with bankruptcy cases, and that he is available when you need him. Filing for bankruptcy is difficult, but having a trustworthy companion can make it simpler.