When it comes to debt, it’s easy to live in denial. At a certain point, it can seem like you’re so deep in debt that taking out another loan or maxing out another credit card can’t make the situation that much worse.
The earlier you address debt, the easier it can be to find a solution to it. The more you go into debt and the lower your credit score gets, the narrower your options become. A low credit score can limit your options for taking out new credit, including an auto loan, a mortgage, getting a credit card, or qualifying for a debt consolidation loan.
These are some of the signs that you may have more debt than you can handle. If you recognize them, it may be time to talk to a Licensed Insolvency Trustee who can walk you through your options. The sooner you get debt help, the sooner you can start rebuilding your financial life.
1. You Make Minimum Payments
A good early warning sign is that you consistently only make minimum payments on your debts, especially credit cards.
Minimum payments are usually designed to cover the interest charges and very little principal. Only making minimum payments can quickly turn into a debt trap, especially if you’re still adding to the balance on that credit card.
2. You’re Stressed About Bills
The next step toward debt trouble is stressing about making bill payments at all. When you feel yourself worrying about whether or not you’ll be able to pay every bill by the end of the month, it’s a sign that you may be in too deep.
Don’t wait until you start getting calls about unpaid bills.
3. You’re Getting Collection Calls
Once your creditors start calling you, it’s time to do something about your debt. Collection calls aren’t just a nuisance. They can impact your mental health, as they’re a constant reminder of your precarious financial situation.
4. Your Wages Are Going to Be Garnished
Wage garnishment is a sure sign that you need immediate debt help. A creditor can only garnish your wages by getting a court order (with the exception of tax agencies), which can be expensive to get.
It’s a sign that you owe a large sum of debt, and your creditor no longer has patience for missed payments. They’re trying to get anything they can.
A wage garnishment takes payments directly from your paycheck, and it means a significant loss of financial autonomy. You can no longer decide where your money goes or what to prioritize.
5. You’re Insolvent
Finally, there’s insolvency. This is a state where you owe more than you own in assets, or that you can repay on your income.
Insolvency can come fairly early on in the debt cycle, even before the stress kicks in. However, being insolvent makes you eligible for debt relief options.
If you’re able to get a consumer proposal, it can be a better alternative to bankruptcy because it doesn’t require you to sell any of your assets.
The earlier you can get debt help, the more options you have. Take note of these signs, and don’t hesitate to act.
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