Bankruptcy can feel like a heavy decision to consider. The paperwork, the change to your lifestyle, the potential feelings of failure – many people expect it to be an unpleasant experience, which makes them push off the decision for far too long. However, most people do not fully understand what bankruptcy entails, how to go about assessing whether or not they are candidates for bankruptcy, or, most importantly, how beneficial it can be to your life and finances in the long run. The media has convinced most people that bankruptcy is a negative thing, when in reality it’s simply an option to better your future. Also it is important to remember that a Licensed Insolvency Trustee is there to review your situation and discuss all available options before you make a decision.

Below are some of the signs that you might need to begin educating yourself on to understand what bankruptcy entails.

Minimum payments on your credit card.

If you are only capable of making the minimum balance payment on your credit card, you are unable to effectively service that debt. Making minimum payments means you are still being hurt by interest in the long run.

Bill collectors are bothering you.

If you are constantly being called by bill collectors looking for money that you owe, this is not a good position to be in. Being called by bill collectors can severely damage your credit rating and take an emotional toll.

Using credit to pay for necessities.

If you cannot afford to pay for necessities (food, utilities, etc.) with cash that you already have, this is a serious sign that something is very wrong financially. Putting the necessities on credit means that, in the absence of that credit, you would not be financially stable enough to look after yourself.

You’re considering debt consolidation.

If your debt continues to pile up and servicing it individually ceases to be an option, you may be considering debt consolidation. This is typically the first sign that your financial situation is beginning to fall apart. It’s worth noting that debt consolidation can be a great option for some people, but it’s not the best solution for everyone.

You’re unsure about how much you actually owe.

This is perhaps the worst situation to be in financially. Not knowing who, or what, you owe is not only scary, it is usually an indication that people have given up on their financial well-being because they simply see no end to their debts. However, understanding that bankruptcy is a helpful option in this scenario could end up saving you a lot of time, money and emotional anguish.

Bankruptcy, while a daunting prospect, does not mean you have given up. It does not have to be something that is imposed on you, rather, a responsible, financial decision that you make given the circumstances. Many people, even with minimal will and determination, declare and bounce back from bankruptcy, understanding that to regain their financial health, they have to start fresh. If you are unsure about when to declare bankruptcy, keep in mind the above indicators. While they are not guarantees that bankruptcy is the right solution, they can help you better understand your financial position and some of the options available to you.