Bankruptcy law was created to help individuals who have an insurmountable amount of debt. While it is a solution for those who are stuck in impossible financial situations, those who have filed will agree that the best solution is to avoid bankruptcy and the impossible financial situation in the first place. The easiest way to do that is to take a step back and consider your lifestyle. Are you living within your means or beyond them?
5 Signs that You Could be Living Beyond Your Means:
- You have a credit score below 600.
- You are saving less than 5% of your income.
- Your credit card balances are rising.
- More than 28% of your income is spent on your housing.
- Your bills are spiraling out of your control.
Keep an eye on your credit score. Generally speaking, any credit scores below 600 can indicate that you’re in over your head financially. A savings rate lower than 5% indicates that you might be in real financial danger. It only takes one emergency or unexpected disaster to leave someone without adequate savings in an impossible spot financially. If you see your credit card balances increasing, you might have a habit of paying only the minimum payment due on your cards each month. If you outline your budget and see that more than 28% of your gross income each month goes towards your rent or mortgage payment, property insurance or property taxes, you are most likely in over your head and in need of decreasing your housing cost or increasing your income. If you see your bills spiraling out of control, you might be purchasing on credit and making installment payments. It’s something of a national pastime. Your monthly income might seem healthy, but a number of small “installment” payments combined with credit card payments add up, nickel and diming you straight into filing for bankruptcy because you see no other way to meet all your financial obligations.
Unfortunately, for many, the about face regarding credit, savings, and living within your means came too late to avoid financial disaster. If you need help filing for bankruptcy in order to obtain a discharge of debt, contact a southern California bankruptcy attorney at Westgate Law.