Common warning signs that you are in financial difficulty (And possibly heading for bankruptcy)

  1. Your minimum monthly payments are more than what’s left after living expenses.

If you don’t have enough money to meet your minimum payments after your basic living expenses (rent/food etc.) then it is time to speak to someone about your money problems.  Not making the minimum payment will usually result in a default and an interest rate increase making it even more difficult to manage your debt.

To see if you have enough money left over, prepare a list of your monthly living costs to see what’s left over from your paycheque.  Then add up your monthly minimum payments and see what the difference is.  If your minimums are greater than the difference, you need to see us.

  1. Your credit card is maxed out. You have run out of credit.

 Most people think they have run out of money where in reality they have run out of credit.  They actually ran out of money many months before.  The financial difficulty started a long time ago.  When you have used up all available credit, it’s a major sign that you probably cannot afford to maintain it. If you max out your credit card, there is definitely something wrong.

  1. You have more than one debt in collections.  

If you have more than one debt that is being pursued by a collection agency, that means you have fallen behind on your minimum monthly payments by more than a month and possibly two or three. Once you get behind it becomes increasingly more difficult to catch-up again.

Once your creditors are calling or sending letters means that creditors have reached their breaking point and are no longer listening to your reasons. The debt collection agency will threaten to sue, but they but rarely actually follow through. But why wait.  It’s better to be proactive rather than reactive.

  1. You can’t provide for your basic living needs.

If you can no longer sustain certain essentials such as food, education, home and vehicle repairs and health insurance, you need to pause and evaluate your situation. There is a problem.

  1. You have more than one payday loan.

This is possibly one of the worst ways that people deal with short term cash needs.  Unless you are going to be making even more money than your last paycheque, payday loans can become a never ending roller coaster of debt.   In many cases, they take out a second, third, or even more loans.  Sooner or later every paycheque will be gone.

  1. You have no back up plan

We all need to save, whether for retirement, vacation or in cases of an emergency. If you have reached the point where you are not able to set aside an amount off your monthly salary, this may be a red flag that your finances are unstable.  That means over spending and living beyond your means.

  1. Robbing Peter to pay Paul. – credit card balance transfers/cash advances

One warning sign that you may be in financial difficulty is by transferring a credit card balance from one card to another for a better interest rate.  But these promotions are generally short term and when that term runs out, the interest rate is typically higher than the first card.

A lot of people will take cash advances from one credit card to pay the minimum on another thinking this is a good strategy.  However, does not make the situation any better as it only prolongs the inevitable. Credit card companies charge interest from the date of the advance and it almost compounds exponentially.  Eventually, your debts will catch up on you, and you will soon find yourself filing for bankruptcy.

  1. Unopened mail

If you have a stack of unopened mail that you know are bills or collection agency notices, this is not a good sign.  It is time to speak to us about your financial situation.

Does this sound like you? Are you getting collection calls?  Are you robbing from Peter to pay Paul?

If you have any of the above warning signs, you may be heading for bankruptcy.  There are other options as well such as a consumer proposal.

You need to call us.  The debts won’t go away on their own.

Call us. It’s not too late.  (604) 605-3335.