5 Signs You Might Be Facing Bankruptcy
Spotting the warning signs early gives you more options. Here are five signs your debts may be heading towards bankruptcy.
See if you qualifyDebt affects people from all walks of life, and when it gets out of control, bankruptcy is sometimes the best way forward. The good news is that bankruptcy and other forms of personal insolvency, such as IVAs and Debt Relief Orders, don’t carry the stigma they once did.
1. You’re relying on credit to make ends meet
Static wages and rising living costs have left many people trapped in a cycle of borrowing. If you’re spending more than you earn each month — leaning on credit cards, overdrafts or payday loans to cover everyday essentials — the situation won’t fix itself.
2. Your credit cards are always maxed out
A key warning sign is only ever making the minimum payment because that’s all you can afford. It can feel like keeping your head above water, but it usually means the balance barely moves while interest keeps building.
3. You’re avoiding your creditors
Leaving letters unopened, ignoring calls and dreading the doorbell are signs things have got on top of you. Once an insolvency solution is in place, your creditors are legally obliged to stop contacting you — so the sooner you act, the sooner the pressure stops.
4. You’re worrying excessively about your debts
Money worries and mental health are closely linked. If your debts are dominating your life, please reach out — trained debt advisers understand this and will treat you in confidence. You can find support at Mental Health UK and through MoneyHelper.
5. You receive a repossession or charging order notice
You probably know your home can be repossessed if you fall behind on your mortgage or other secured loans. But unsecured creditors can also act: if a creditor obtains a County Court Judgment (CCJ) and then a charging order, your unsecured debt can become secured against your home. Get advice from a qualified debt counsellor or licensed insolvency practitioner straight away.
Recognise any of these?
You have options — bankruptcy is only one of them. Depending on your circumstances you might be better suited to an IVA, a Debt Management Plan, or a Debt Relief Order. Start by reading how to deal with your debts yourself or whether an IVA is better than bankruptcy.
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Free, independent debt advice is also available from MoneyHelper, StepChange, National Debtline and Citizens Advice.