Bankruptcy

Bankruptcy should only be considered as a last resort if you can no longer meet your financial obligations. It’s a serious decision with serious consequences. When someone declares bankruptcy, all their assets, except those the law allows them to keep, are turned over to a trustee. The trustee sells the assets and uses the proceeds to pay off creditors.

Repercussions of bankruptcy

• Some debts are immediately cancelled out, such as credit card debt.
• Other debts are not affected, such as alimony and child support, taxes, etc.
• As a result, borrowing could cost you more.
• The bankruptcy may remain on your credit report for several years.

Bankruptcy warning signs

How to tell if you are headed for bankruptcy

• You don’t have a budget.
• You have no control over your spending.
• You have no financial cushion (emergency fund).
• You’ve purchased a home above your means.
• You’ve purchased a car above your means.
• You use credit cards indiscriminately.

If you recognize yourself in these warning signs, it’s time to start turning things around.