Do feel like your debt is overwhelming? Are you afraid to answer your phone due to creditor harassment? Debt doesn’t have to be insurmountable.

Most people can choose between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy results in relief from unsecured debts and the potential surrender of “non exempt” property. Chapter 13 may allow you to retain property, but you must make payments to the Court Appointed Trustee for three to five years. Here are some common habits from a bankruptcy lawyer that may lead you down the road to consider filing bankruptcy.

6 Habits That Lead to Bankruptcy

1. Owning An Excessive Number Of Credit Cards

Owning more than three active credit cards can easily set you up for serious debt, especially if you do not pay close attention to what you’re spending or which card has more debt on it than others. It’s easy to buy extra products and services with plastic than cash, especially when the limits are high. Making the minimum payment only allows interest-heavy debt to accumulate quickly. Consolidate your cards or consider canceling one assuming it will not harm your credit too much. Remember, if you can’t pay, don’t pay. 

2. Not Paying Bills on Time

Paying bills on time not only contributes to a high credit score, but it also keeps late fees off your invoices. Get in the habit of paying bills as soon as you can to avoid unnecessary fees and credit score issues. Also remove any automatic bill pay options. You can get too comfortable and forget how much you are spending on utilities, internet, phone, and other necessities every month.

3. Purchasing Big-Ticket Items New

Purchasing new vehicles, property, large appliances, and other big-ticket items can get expensive fast, especially when you already have serious debt or exclusively use credit cards. New cars and trucks are among the worst investments when you have debt because they depreciate in value the minute they leave the lot. Used cars offer quality alternatives without the high selling price or depreciation rate.

4. Not Creating An Emergency Savings Account

Even if you make smart money decisions regularly, you need to plan for emergencies. Accidents and injuries are among the many unexpected bills that require you to spend more than you planned in a given month. Set up a savings account with an excellent interest rate provides the cushion you need in the event of an emergency so you don’t rely entirely on credit cards or loans.

5. Taking Out Payday Loans

Payday loans offer an attractive solution when you need money for bills or other expenses fast. Yet, these short-term loans frequently come with outlandish interest rates that put you further behind for the month. They are never recommended by bankruptcy lawyers because they contribute to the cycle of debt instead of eliminating it.

6. Cosigning for Family or Friends

What if a family member may need a house, a car, a student loan, or other item that they just can’t finance on their own? Never, Never, NEVER cosign or join a loan with them. It may cause hard feelings, and really hurt both you and them. 

Don’t let your debt continue accumulating—talk to bankruptcy lawyers at Sippel Law Firm PLLC in Kingman, AZ, to get the relief you need. The law office has served the region for over 35 years, providing debt relief services among others from a knowledgeable, caring team. Call (928) 753-2889 today to schedule a free consultation or visit the bankruptcy lawyers online for more practice area information.