Here in the UK, debt is a national crisis affecting people from all walks of life. And when debt really gets out of control, declaring bankruptcy is often the only viable option for dealing with them. On the plus side, bankruptcy and other forms of personal insolvency, such as IVAs and DROs, don’t carry the stigma that they once did.
If bankruptcy turns out to be the best way to manage your debts, there’ll be some difficult times ahead – but you could walk away from your money problems just 12 months after your Bankruptcy Order is made. This article looks at 5 common warning signs that bankruptcy might be just around the corner.
- You’re relying on credit to make ends meet
In recent years, static wage and salary levels combined with rising living costs have left many people trapped in a vicious circle of never-ending debt. And if you’re spending more than you earn each month, you’ve got problems. Whether you’re relying on credit cards, bank overdrafts, payday loans or even all three, the situation won’t go away on its own, so it’s time to seek expert help.
- Your credit cards are always maxed out
Thanks to irresponsible lending practices that the FCA is trying to stamp out, many people have ended up with combined credit card limits that out-strip their annual incomes several times over. And if temptation proves too much, you could find yourself with a mountain of debt and no realistic way of paying it off.
A key warning sign is only ever paying the minimum payment because that’s all you can afford. You might feel that by doing this you’re keeping your head above water, but in reality, you could be heading for serious trouble.
- You’re avoiding your creditors
If you’re leaving bills and reminders unopened, avoiding creditor phone calls and not answering the front door bell, then things have got out of hand. You need to stop sticking your head in the sand and hoping the problem will go away on its own. As soon as bankruptcy, or any other form of personal insolvency, is put in place, your creditors will be legally obliged to leave you alone. So, the sooner you take action to tackle your debts, the sooner the harassment will stop. The ball’s in your court.
- You’re worrying excessively about your debts
Everyone worries about money every now and again. But your debts shouldn’t be keeping you awake at night, giving you nightmares or distracting you from work or other activities. It’s a sad fact that being in debt is often linked with the development or worsening of mental health problems such as anxiety and depression, which can have serious long-term consequences for your health.
So if you’re feeling overwhelmed by your debts, or your money problems are dominating your life, it’s crucial to seek professional debt advice straightaway. Trained debt advisers are fully aware of the health problems that debts can cause. They’ll discuss your situation with you in confidence and can refer you to appropriate support services if required.
- You receive a repossession notice
You probably know that your home can be repossessed if you don’t keep up with your mortgage payments, or repayments of any other loan that’s secured on it. But did you know that your unsecured creditors, such as credit card providers and payday loan companies, can also take steps to repossess your home or other assets?
This can happen under the following circumstances:
- Your creditor takes out a County Court Judgement (CCJ) against you and then applies for a charging order to enforce it, and
- The charging order is made final (it’s a two stage process) and you don’t comply with the terms and conditions required by the court, and
- You’ve missed payments that the court ordered you to pay on the CCJ.
If you’ve had a charging order made against you, this means that the court has ordered the amount of your unsecured debts to be secured against the value of your home or another asset. In most cases, your creditors will happily wait for you to sell the asset in question before collecting what’s owed to them. But under the circumstances described above, they can try to make you sell the asset immediately.
Receiving a charging order is itself a sign that your debts are severe, but a repossession order takes things to a wholly different level. It’s imperative to consult a qualified debt counsellor or licensed insolvency practitioner for advice as soon as possible.