No one wants to think about what he or she would do if faced with a major financial crisis. However, what if the unthinkable happens, and you find yourself facing a financial situation you never thought you would encounter? Some bankruptcies are precipitated by events that are beyond a person’s control – for example, a major health crisis, a job loss or divorce. But a number of causes are entirely within a person’s power to stop. After 12 years serving as a bankruptcy judge, the Hon. Margaret Cangilos-Ruiz, the chief judge for New York’s Northern District Bankruptcy Court says she has seen it all. In a recent interview with MarketWatch, she shared her insight on how people can avoid bankruptcy and setting foot in her courtroom.
Monitor Your Credit Cards
It can be very easy to rely on credit cards to make all of your daily purchases. However, when that bill comes in the mail, and you see just how much these small purchases add up to, the outstanding balance can be more than you predicted. It can also be tempting to only pay the minimum balance listed on the statement, promising yourself that you will be catch up on the payments eventually. A good rule of thumb is to never carry a credit card balance from month to month. If at all possible, it is best to pay the balance in full, but if this cannot happen, put together a plan to pay off the balance completely over time.
Not only should you not carry a large balance for too long on your credit cards, it also helps to pay them on time. As soon as you miss one or two payments, your card’s interest rates will skyrocket, making it even more difficult to pay down the balance. As soon as you receive the bill, make sure you do not put it aside and forget to pay it. You will be saving yourself hundreds of dollars in fees and penalties for the long run.
Monitor Your Credit Score / Report
It also helps to keep an eye on your credit score. A good credit score will make it easier for you to take out a loan in the future for big purchases, such as a home or a car. Also, you never know when you will hit a rough patch down the road and will need to take out a loan to help finance medical bills or pay off an unexpected expense. By periodically checking your credit report, you can keep track of your score and also make sure that no incorrect accounts or mistakes are on your credit report. It is best to discover these issues ahead of time and fix them before they become a bigger problem.
Practice Responsible Spending Habits
Paying off your credit card and creating a budget is one thing, but these cannot be possible without controlling your spending. One of the biggest ways to do this is to limit how much you spend on “non-necessary” items and differentiating between something you want and something you need. If there is a large item that you want, save up for that item and only purchase it when you have enough money to pay for that item. Keep an eye on the small purchases you make on a daily basis, as those do add up. Many consumers find success in allowing themselves to use a certain amount of cash every month on non-necessary expenses. Once the cash is gone, they are not able to purchase anything more of their “wanted” items. Resist the urge to rely on credit cards to pay for a cup of coffee or a new shirt after you go through your cash allowance for the month.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.