Image via Wikipedia

There are few things more distressing in personal finance than filing for bankruptcy. Aside from the financial drawbacks of bankruptcy which can last years, there is also a potential psychological effect to filing. The best thing to do is see the warning signs of bankruptcy coming so that you can effectively thwart damaging your credit for at least the next seven years.

An individual debtor is usually eligible for a Ch 7 discharge while in bankruptcy but recognizing key warning signs can keep you out of this situation altogether. One sign that you are close to bankruptcy is when your credit card debt is a struggle for you to handle. Consumers often play one credit card from another, making minimum payments just to keep credit in good standing. However, when even these minimum payments are a struggle to keep up, you have an early warning sign that a bankruptcy could be looming.

Another sign of a potential bankruptcy is when basic needs are a struggle. For example, if you are having difficulty keeping up with your grocery bills or electric and heating bills, then it is a sign of an impending bankruptcy. Sometimes, over-extending yourself on a home you can’t afford or toys you don’t need can result in having no money left over for basic necessities. This is a warning sign that you are close to filing.

Collection calls and notices as well as property loss are also a sign that you could be close to bankruptcy. If debts have gone to collection, it has most likely been at least a couple of months since you have paid on the bill. This can lead to a loss of property or other assets and is a sure sign that a bankruptcy could be looming.