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Factors That Lead To Personal Bankruptcy |
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By SMith Andrea
 The staggering number of people who file for bankruptcy each year is indeed, overwhelming. However, surveys reveal that not all people who file for bankruptcy are incapable of debt repayment. Some of them only use bankruptcy as a way to escape their duties to lenders. Others sought bankruptcy thinking that it is a quick solution to debt problems.
If youre having difficulty keeping up with your debts, perhaps its about time to take a closer look at how youve been managing your finances. This article talks about the signs that show you may be leading yourself towards bankruptcy.
Uncontrolled use of credit cards. Many people got stuck in huge debts because of uncontrolled credit card use. Because credit cards are so easy to use, some people charge expenses that are beyond their limit without considering the possible consequences. Add to this, the high interest rates on most credit cards can put anyone in debt in just a few months if charges are left unpaid.
If you own a credit card, you need to
be aware of how youve been using your credit card. Do a self-check and ask yourself the following questions:
* Do I charge all my expenses to my credit card?
* Am I able to submit my payments on time or am I usually late in submitting payments?
* Am I able to pay off my balances in full each month?
* Do I often carry over my balances to the next month?
* Do I often exceed my credit limit?
Gambling and substance addiction. Gambling, substance addiction and other vices can lead anyone to bankruptcy before they even realize that there is a problem. Statistics show that an estimated 1.5 million people who filed for bankruptcy did so because they lost everything to gambling.
There is more involved to this type of debt problem than just finances. Some people may try to work out a solution on their own but if the problem involves difficulty in keeping your addiction in control, its best to seek professional help.
High interest rates on credit cards and loans. Some people get stuck in bad debt because of the high interest rates on their credit cards and loans that they never expected. For instance, a person may sign up for a credit card or a loan with an incredibly low interest rate not knowing that the initial low rate can change at any time.
Loans and credit cards with variable rates are based on the Prime Rate so your monthly costs can balloon up right in the middle of your term. Whats worse, the rates may continuously go up until repayment becomes very difficult.
This is why consumers are advised to choose loans and credit cards with a fixed rate of interest. A fixed rate protects you from the possibility of inflation. With a fixed rate loan, youll know exactly how much your monthly costs would be from the beginning of your loans term until the completion of your loan payments.
Andrea Smith is a writer and consultant with Consolidate4Free.com and has been providing consumers and business owners with Free Debt Consolidation Advice since 1990. For years she has helped people with loan and credit problems especially pertaining to Debt Consolidation and Credit Card Debt Consolidation. Copyright 2008.
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