Bankruptcy is essentially an inability to meets one's financial commitments as they become due. Public stereotypes of bankruptcy are often negative and associated with failure, poor financial management and can often lead to the individual being stigmatised by family and friends.
It must be stressed however that many people face bankruptcy for a host of other reasons or unfortunate events which are not always entirely their own fault. Drawing upon my experience or dealing with individuals with serious financial difficulties, this article aims attempts to examine the warning signs associated with bankruptcy in the hope that it can be avoided.
Warning signs to heed;
1. Ignoring the problem
This by far one of the largest contributory factors because few individuals like to believe that they are in financial difficulties for a host of different reasons. For some they fear telling a husband, wife or partner that money is problematic for fear of losing credibility with the person they love or ultimately the relationship. Other individuals are unable to accept that they have an obsessive disorder that leads to over extravagant spending. Still others have just never learnt to budget wisely in the first place.
2. Sleep Disorder/Anxiety
Stress can often cause anxiety or sleep disorders even amongst the most calm and collected individual. We all suffer from difficulties sleeping or anxiety at some time in our life but if you discover that you regularly fret about your financial circumstances and have difficulties getting off to sleep or wake up in the night worrying about money then this is a sure sign that you need to seek some professional help to address your financial budgeting.
3. Always in Overdraft or maxed out on your credit cards
It is now socially acceptable now to have significant credit card debts and whilst the use of credit is generally not a problem you should be concerned if you continually find yourself trapped in a cycle of debt where next month's wage packet only just meets last month's debt.
4. Hiding Bank Statements
Loved one's are often best placed to identify warning signs of bankruptcy in their wife, husband or partner. If you observe the person you share your financial resources with getting to the post each morning it could be a sign of financial difficulties and they may be hiding financial information from you. Of course this conclusion could perhaps only be reached if some of the other warning signs discussed earlier are also apparent.
5. Regularly asking for a salary advance
Whilst it's perfectly acceptable to occasionally get a cash advance from your employer to help you out of a tight spot should be concerned if you continually seek out your boss before your next pay day in order to obtain a salary advance. At this you should start to realise that you may be heading towards bankruptcy.
6. Language used to describe your financial circumstances
What has language got to do with anything I hear you ask? Well quite a lot. At a cognitive level as human beings we often try to rationalise and justify our behaviour internally to ourselves and this can be used both positively and negatively in our lives. An example of a positive use of cognition in our financial undertakings would be "I really like those shoes, but I just can't afford them this month." You should however be concerned if you start using some of the following language to describe your financial habits, "I'm just in a tight spot right now", "I'm a bit strapped for cash right now but I'll pay you back", "can you lend me some money until next week". These can all be warning signs that you should listen to that you may be on the slippery slope to bankruptcy.
If you need some further support to avoid bankruptcy call this independent government backed site.
The UK Insolvency Debtbuster helpline 0800 074 6918
Summary
Bankruptcy affects many people for different reasons but there are some general warning signs that should be noted as a means of preventing further decline. Whilst this can never be a definite examination of a subject that is complex and deeply personal by far the biggest warning sign of a looming bankruptcy is Ignoring the problem. By overcoming this barrier an individual is able to address financial difficulties before they get worse. Remember that thought processes and spending habits can also indicate underlying difficulties in personal finances. The most qualified person to spot the warning signs of bankruptcy is YOU so don't ignore the problem get some professional advice before it's too late.
More Financial Planning Information available at http://www.friendsandmoney.co.uk/financialplanningarticles.html
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