It is frightfully easy to find yourself cascading in a downward spiral of debt. You may have a history of problems handling money, or you may have recently gone through an experience that has made it difficult to make ends meet.
Whatever your case, here are some telltale signs that you are in trouble with debt.
You No Longer Open Bills
If you find yourself avoiding opening your bills, this is a pretty good sign that you are in debt. Bills may remind you of your situation and many people try to block them out, instead of facing the problem head on and trying to find a way to negotiate with the companies you owe.
Your Credit Card Applications Have Sky-Rocketed
If you are eagerly sending in applications for every credit card offer that is slipped under your door, chances are you are in debt or headed there fast. You may think that getting new cards to pay off the existing balances on older cards is an easy solution, but really it only makes your situation worse. Applying for multiple cards in a short space of time will hurt your credit score and only serve in delaying the inevitable outcome.
You Are Paying Only The Minimum
Making minimum payments on credit card balances is never a good idea. It seems like an easy way to get credit card companies off your back, but it will hurt you in the long run. The Credit CARD Act 2009 that will come into effect in February 2010 includes a lot of new disclosure requirements that will hopefully reduce the urge to pay only the minimum due. Under the new act credit card companies must state how much interest will be charged over time if only the minimum payments are made and must also highlight how long it will take to repay the debt with the minimum payment only.
Judgments Are Filed Against You
If you have managed to exasperate the bill collectors they will not simply disappear. The next step is to take the matter up in court. A court matter could result in the collectors coming to reclaim items to the value of your outstanding debt, not to mention any judgments will be put on your credit report where it can sit for as long as 7 years, maybe even longer if your state allows unsatisfied judgments to be renewed. Needless to say, this will have a damaging effect on your credit score and can negatively affect your ability to get new loans or even apply for a job.
If you recognize these signs you should take steps to reverse your situation immediately. Develop a plan to pay down your debt by putting savings into bill payments and negotiating with collection agencies to make your payments more manageable. You can get out of debt if you truly make a commitment to the goal and start chipping away your balances.
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