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Six Signs You May Be on the Verge of Bankruptcy

Financial struggles can be overwhelming, and it is not uncommon to experience difficulties in paying off debts and bills. However, constant financial pressure could lead to bankruptcy. Many people delay seeking help until it is too late.

Bankruptcy can have an enormous impact, both emotionally and financially. For this reason, it is imperative that you recognize the signs of impending bankruptcy to prevent total financial ruin. If you think you are heading toward bankruptcy, you should seek legal help from an attorney.

Our Bay Area bankruptcy attorney Melanie Tavare provides a free initial consultation and can evaluate your situation to determine whether or not filing for bankruptcy is the right course of action in your case.

Signs That You May Be Heading Toward Bankruptcy

There is no shame in filing for bankruptcy. In fact, thousands of Americans declare bankruptcy every year. In May 2023 alone, the number of bankruptcy filings throughout the United States totaled more than 38,600, a 23% increase compared to May 2022, according to the American Bankruptcy Institute.

The following signs may indicate that you are on the verge of bankruptcy.

  • You are Living Paycheck to Paycheck

If you are living paycheck to paycheck, it could be an indication that you are unable to manage your finances efficiently. Living without emergency savings sets you up for financial instability, and even a minor setback could cause a significant impact. You should plan your finances with a budget and live within your means. If you are struggling to make ends meet, you need to take timely corrective measures.

  • You Have Already Missed Your Monthly Payments to Creditors

Missed payments to your creditors can be a red flag for financial trouble. When bills go unpaid, you will start experiencing penalties, late fees, and increased interest rates, which can lead to further financial stress. If you miss payments, contact your creditor right away to arrange a payment plan.

  • You Have a High Debt-to-Income Ratio

Your debt-to-income ratio is a significant indicator of your financial stability. Total your monthly debt payments and divide them by your monthly income. If your debt payments eat up more than 40% of your income, you may be in trouble. Having a high debt-to-income ratio could cause significant financial stress.

  • You Have Maxed Out Your Credit Cards

Maxing out your credit cards is an indication that your expenses are exceeding your income. Credit cards are not a source of income. They are a form of debt that accumulates interest. Maxing out your credit cards indicates that you may be living above your means. This habit can lead to an unmanageable debt load and can quickly lead to bankruptcy.

  • You are Constantly Getting Phone Calls from Debt Collectors

Debt collectors calling you regularly can be overwhelming and emotionally draining. It is essential to reply to their calls and discuss a debt repayment plan rather than avoiding their calls. Debt collectors are legally allowed to seek payment for debts you owe.

  • You Do Not Qualify for Debt Management

If you do not qualify for debt management, you could be on the verge of bankruptcy. Debt management plans can allow you to repay your debt within an affordable, workable, and realistic payment plan. If you do not qualify for this program, you should seek financial advice or consider filing for bankruptcy.

Are You on the Verge of Bankruptcy? We Can Help

Recognizing the signs that you are on the verge of bankruptcy is the first step to prevent it. If you identify any of the above signs, do not ignore them. It would be best to seek help right away to explore your options and find a workable solution. Reach out to the Law Offices of Melanie Tavare to get the guidance you need. Call 510-255-4646 to receive a free case review. 

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"Melanie is the best she very responsive and helpful throughout the process everything was taken care of smoothly. If you are thinking of going through bankruptcy she is the best attorney for you. I will forever be grateful having the chance to work with her. She is very honest too."


"I can't thank Melanie enough for helping me through a challenging process and doing so with incredible knowledge, professionalism and tenacity! She went to great lengths to keep me informed, she responded quickly to my questions, and communicated in terms that I could understand. I highly recommend getting in touch with Melanie should you have the need."


"Choosing to work with Atty. Melanie has been one of the best decisions I've ever made. She was a very patient professional to work with and attentive while providing valuable solutions to all of my concerns. If you are searching for of an Attorney who is knowledgeable, transparent, and diligent - well that's Atty. Melanie."


"What I liked about working with Melanie was how prompt and easy to work with she was. She made the process clear and understandable with as little stress as possible. I would work with her again and recommend her to others."