- Sudden loss of income: A financial advisor would likely advise individuals to have at least 6 months of monthly income, set aside and saved. This is so in case of a sudden loss of income, you will be able to sustain your monthly bills while you search for new employment. However, the fact is most people are unable to save that much money. If there is a sudden loss of income occurs, they find themselves in a financial crisis which will lead to credit collection activity, such as; constant phone calls, threatening letters, lawsuits, and maybe even liens or garnishments.
- Decrease in income: As stated above, a financial advisor would likely advise individuals to have at least 6 months of monthly income set aside and saved. But again, most people have trouble saving money due to unexpected expenses or are not earning enough money to be able to save on a monthly basis. Those who experience a decrease in income, may be able to pay certain monthly household expenses, but for the most part are sustain monthly credit cards, credit lines, or medical bills. Soon they will find themselves just as inundated with creditor collection activity as those who suddenly loss all income.
- Realistic Debt Management: Many people are managing their debts, but is it realistic? For example, many people who ultimately decide to file for bankruptcy are filing because although they are employed , they are having to spend all of their disposable income on minimum monthly credit cards and credit lines. In turn, they have the use the credit card and credit lines s to sustain their necessary monthly living expenses. This can lead to a viscous cycle of using all disposable income or cash to pay credit minimums, and never seeing any balances to the debts decrease. This is particularly true where people have high interest rates and/or are reaching maximum limits on their credit. In other words, there is no end in sight as it relates to eventually paying off debts and moving forward.
- Pulling from Retirement Accounts: Often times I see people who truly cannot afford their monthly obligations, but continue to pull from IRAs, 401Ks, or other retirement accounts in order to sustain their monthly debt obligations. But what they may not realize is that while they are doing that, they are creating a false impression of their finances. This is because unless all of the debts are ultimately paid in full, once the retirement money runs dry, they find themselves in financial crisis. The unfortunate part about this situation is that retirement money is exempt from creditors, and if they were to have filed for bankruptcy rather than deplete the retirement money, they could have discharged all of the debts and retained the money for retirement.
Contact Our Experienced Orlando Bankruptcy Law Attorney
If you find yourself going through difficult financial times in Central Florida, we strongly suggest you contact a knowledgeable and skilled Orlando bankruptcy attorney, who can help you identify your options. Call us today at (407) 969-0044 for a free consultation! You may also fill out the online form provided at the top of this page and we will get back to you shortly. We respect your privacy and will keep your information confidential.