Personal bankruptcy is never the preferred predicament to be in, however many people find relief in addressing their financial difficulties and starting over. No one is perfect, and people make mistakes. Yet a lot of people put off filing for bankruptcy for far too long. They choose to ignore the elephant in the room and spend many years struggling just to make ends meet. Yes, bankruptcy is never enjoyable and many individuals find it humiliating, however it is the very first step towards financial freedom. Always keep in mind that there is a life after bankruptcy.

Bankruptcy Melbourne, Insolvency Melbourne, Declaring Bankruptcy MelbourneIf you’re struggling financially and looking into bankruptcy, it’s necessary to acknowledge the warning signs. Here are a couple of signs that you’re in serious financial distress.


Making minimum repayments only


One of the clearest signs of financial challenges is when you can only afford the minimum repayments on your loans, yet your income isn’t increasing. Interest charges and fees will shortly force you to make a change, either by getting a second job or consolidating your loans. And if you don’t make a change, something must give at some time. Surely, it’s okay to have a balance on your credit card debt for a few months, but it’s useful that you think long-term. If you’re sinking in interest charges and can only afford to make the minimum repayments, it’s time to make a change.


No savings


If you’re living paycheck to paycheck and find that your savings are being used to make repayments on your loans, you’re heading for trouble. Most financial specialists advise having three to six months of living expenses in a specialised bank account. This account should cover all of your expenses for that period of time: rent, meals, transport, bills. What happens if you lose your job? Or can’t work as a result of sickness? And if you’re purchasing luxury items while you have high interest loans remaining, you should really get your priorities straight. Without three to six months of living expenses in your savings account, personal insolvency may well become a reality.


Using credit cards to pay your bills.


Credit Cards are a convenient way to purchase items by giving yourself a short-term loan, especially in today’s cashless society. Commonly, there is an interest-free period of a month or two, but after this time, the interest rates and charges are extremely high. If you are using credit cards to pay for bills given that you simply don’t have enough cash, you’re on the brink of disaster. Some people will even have numerous credit cards so they can pay off one with another. This is a key sign that you’re heading for personal bankruptcy. Credit cards can be rather hazardous if used improperly. Paying bills with debt only causes more debt, with big interest charges added on. If this sounds familiar, seek professional advice asap.


Debt collectors are contacting you


It may appear to be obvious, but if debt collectors are invariably harassing you on the phone or in the mail, you should consider bankruptcy help. Visualise it this way; lenders who believe that they cannot recover their loan from you will sell your debt at a reduced rate to debt collectors. If lenders have lost faith in your capacity to pay your bills, there is undoubtedly a problem. If you’re scared to answer the phone or open your mail as a result of debt collectors, it’s time to take action. You can only brush off those threatening phone calls and letters for so long before your quality of life starts to corrode. Pick up the phone and call the specialists, that’s what they’re there for.


Losing sleep


Are you so upset about your financial future that you can’t sleep at night? This is most probably the biggest warning sign that you’re moving towards bankruptcy. When your health and happiness are disintegrating because of your financial position, it’s time to realise that you need help simply to improve your quality of life. Bankruptcy is not the end of the world, and is, in truth, the first step towards financial freedom. Consult with a bankruptcy expert to find out what options you have.


If you’re encountering any of the above warning signs, chances are that you’re actively in financial hardship and are heading towards bankruptcy if changes aren’t made. Personal insolvency is the final step in a long process, and normally there are options before you need file for bankruptcy. To find out what options you have, or to talk with someone about your situation, contact Bankruptcy Melbourne on 1300 818 575 or visit