Ten Ways That can Lead You Into Bankruptcy
- Balance Transfers not used properly – There are new credit cards requesting introductory rate that is too good to be true. Let say they offer 0% financing for a year if you sign up with that particular credit card. You still have to be focused and pay down the debt. You have to keep the debt at a minimum and do not let it go out of control. This is a very common mistake people make which means that they create new debt with the credit cards without paying down the old debt. By all possible means, it makes you avoid bankruptcy protection under the United States law.
- Ignoring your credit report - It is very important to periodically check your credit report. I would suggest to pull your credit report every year to see if that the credit card charge on there is accurate. If it is not accurate, I would recommend to challenge it. As a debtor, you want to correct the inaccurate information because it will affect your credit rating by lowering your credit score. The lower your credit score than the higher interest rate you will be charged for all types of loans and credit. It is better to have a higher credit score because of good credit history by paying your bills and reviewing your credit history to make it is accurate. With lower interest rates, you can save lots of money. It helps you stay away from bankruptcy.
- Not notifying creditors about your financial hardship – If you have a problem financially, some creditors have their own programs where you can qualify if you facing hardship.
- Not following your budget – Make sure that you budget your money which means you can only spend whatever you have earned. You should never spend more than you earned.
- Retail Store Credit Cards – The interest rate is much higher than normal credit cards. If you do not pay the entire balance at the end of the month, you are looking at high interest payments.
- Having an Emergency Fund – You should have enough money on hand if you face an emergency. It should be a rainy-day fund where you can pay your bills from at 3-6 months if you lose your source of income. One example is this covid-19 epidemic because you do not know when these emergencies will arise.
- No priority in paying bills – You should pay your most important bill first. For instance, you should pay your mortgage and car loan because you need shelter and you need transportation to get to work. These are the two essential items that should be current.
- Charging everything and not paying cash – One example of this is small purchases such as coffee, soda, meals, etc. If you have some money on hand, why not pay cash as opposed to charge everything you buy. This can easily add up.
- Late payments for credit cards – You just want to pay late, but keep in mind there is a late fee. With some credit cards, your interest will increase exponentially if you pay late. Make sure you pay on time, so you do have to deal with these issues. If you do, make sure you know the terms of the agreement.
- Making minimum payment on credit card balance – You should try to pay off the balance if you have on the credit card. However, paying a little bit is better than paying nothing at all. You do not want to pay the interest that is on the balance if you can avoid it.
Anymore questions about bankruptcy, you can contact a Maryland Bankruptcy Attorney which the office is located in Frederick, Maryland. However, the Attorney does serve in the counties of Frederick, Montgomery, Washington, Montgomery, and the remaining counties in the Maryland Area. The Soubra Law Firm’s phone number is 301-219-5039.