While carrying some debt is necessary for building a healthy credit history, it can be quite stressful when the amount you owe creditors has suddenly become unmanageable. This is why it’s important to closely monitor your debt situation so you can recognize if your finances seem to be getting out of control. If possible, you want to prevent your money troubles from continuing to build up over time until the only solution is to file bankruptcy. Below are a few common warning signs of a serious debt problem. 

5 Red Flags Your Finances Are in Despair

1. You Only Pay the Minimum on Your Cards 

When you only pay the minimum due on your credit cards each month, you could be facing many long years of payments. After adding in the interest, it’s likely you will end up paying double or triple the amount you actually charged. It’s best to pay off credit card balances every month or at least as much as you can over the minimum.

2. You’re Paying One Debt With Another

If you are frequently using one line of credit to pay another, there’s a good chance you’re dealing with financial hardship. Taking on new debt to pay existing debts will only create a cycle that you won’t be able to get out of. You need to actually find the root cause of your debts and adjust your financial habits to eliminate the problem.

3. You’re Not Putting Money Into Savings 

One of the biggest indications of a debt issue is that you’re unable to put anything into savings each payday. Should an unexpected expense arise, there’s a good chance you would be forced to take on even more debt. This is what leads many people to file bankruptcy. No matter how much it is, saving something is always better than nothing.

4. You’ve Been Denied New Credit 

If you’ve recently been denied after applying for a loan or credit card, this should give you reason to take a close look at your financial situation. Typically, lenders and creditors won’t extend any more credit offers to someone who has accumulated an excessive amount of debt. This is a signal you need to start working on improving your debt-to-income ratio by paying down your balances. 

5. You’re Being Contacted by Creditors 

Generally, creditors will begin calling only after a debtor has started missing their payments. Thus, if you’re being contacted by creditors and debt collectors, you know your debt has become insurmountable. Often, a bankruptcy attorney can help you work with creditors to figure out a repayment plan that fits into your budget.

If you are struggling with a high amount of debt that you don’t have the means to pay, it may be time to consider pursuing a fresh financial start through bankruptcy. The legal team at Bueker Law Firm has been helping Stuttgart, AR, residents regain their economic freedom for years. They will carefully assess your individual situation to determine if bankruptcy is the right choice for you and which chapter would grant you the most relief. To schedule a consultation with an attorney you can trust to keep your best interests in mind, call (870) 673-1313. You can also visit their website to learn more about the bankruptcy services they offer.