It holds true that the number bankruptcies has fallen over the past few years. This is due to the growing improvements in hiring, enabling people to pay their debts. Still, this does not mean that all people across the world are in good financial shape. And believe it or not, when in financial trouble, most people do not even consider filing for bankruptcy, as they cannot afford to pay attorney and court expenses.
Here are some noteworthy indicators suggesting that you are teetering on the edge. Make sure to keep them all in mind and seek legal help if you feel that bankruptcy is looming in your future!
1. You Are Missing A Lot Of Payments
This is without a doubt the most obvious in the list. If you are starting to have troubles paying bills on time, then you clearly have a financial problem. This could also indicate that your debt has grown bigger and to an extent that using the term “excessive” is an understatement. It especially becomes worrisome when you are unable to meet most of your major obligations, such as utility bills and staff insurance payments, among many others.
2. Sales Figures Going South
In many states, sales figures tend to be unstable, which may result in a failed business. While it’s true that this trend is considered natural, business owners can save themselves from going down.
For instance, many businesses are advised by bankruptcy attorney San Diego to review their sales figures on a weekly or monthly basis. Doing so allows them to understand and determine where exactly they are in their profits. After all, you want to make sure you are earning, not the other way around. If you are starting to notice a consistent downward trend in your sales, then it is time to take an immediate action to stop it from plummeting further. Nevertheless, understand that this is already a warning sign that your business is heading towards bankruptcy. It is important, in this case, to accept the reality and move forward with plans to counter it.
3. Credit Cards Are All Maxed Out
This one here is like the tip of the iceberg. At first, you might think there is a way to turn things around even after maxing out all of your business credit cards. In reality, though, it is like being cornered and having no way to move forward. As soon as your credit cards’ maximum allowable balances are used up, you will eventually end up hitting a wall. For starters, it will be difficult for you to increase those maximums further. You will even have a hard time gaining approval if you decide to apply for other types of loans. Also, a bad sign is solely relying on your credit cards for basic business expenses, such as office supplies or utility bills. If you have a tendency to use credit to cover the costs of running your business, you may have a problem that could easily lead to bankruptcy.
4. Unable To Recover From a Major Setback
This is definitely one of the scariest signs of all — and it is something you do not want to experience. And truth is, most businesses do not have an emergency cash reserve, which they could use in such a situation. A major financial setback could be anything and it really depends from one individual to another. For instance, you might be having troubles in your business and it is costing you thousands of dollars. You may be facing business competition that was unheard of years ago. You may even be operating in an industry that has taken a turn for the worse in recent years. Whatever the situation, you may unable to find a way to recover from it. Without a financial safety net, a major setback will almost certainly result in your business filing for bankruptcy.
5. Turning To High-Cost Loans
You already know that using your credit cards every now and then is bad. What is worse than this is turning to high-cost loans, thinking these would solve all of your financial problems. Well, they do not really. Sure, they could give you the money to pay some business debts, but they do not shield you from the financial storm you are facing. They could make the situation worse and, at the same time, could hasten your journey towards bankruptcy. Ironically, your only way out here is bankruptcy — and it is something that you really have to consider when all other options are exhausted.
Bankruptcy is definitely every business owner’s nightmare. But with proper knowledge and skills, this unlikely scenario can be prevented. Regardless if you’re already a veteran or just a newbie in the business field, it’s best to take precautionary measures in everything you do. After all, it's your business and future that are on the line.
Published by Elena Tahora