by Susan Paige
Debt often starts as a slow build-up before it suddenly feels overwhelming. Many people don’t notice the warning signs until their financial struggles grow out of control. It can sneak up on you before you realize the situation is too much to manage. Here are key indicators that you might be facing debt issues.
You Incur Overdraft Charges
Banks charge overdraft fees when your account lacks sufficient funds to complete a transaction, yet the bank pays on your behalf to cover the purchase. Overdraft protection may provide a short-term solution by preventing declined transactions.
Relying on it consistently could indicate that you are spending beyond your available budget. This reliance can foster a habit of depending on borrowed funds, potentially leading to financial strain and an accumulation of debt over time.
Receiving an s129 Letter
If you receive an s129 letter of demand, do not ignore it. If you disregard the S129 notice, a legal process will begin. Typically, your account will be transferred to a debt collector or lawyers who handle debt recovery. This process might involve you being asked to sign an acknowledgment of debt and outline a payment plan.
However, many credit providers proceed directly by issuing a summons to start legal action. The court sheriff delivers the summons. They give you 10 business days to indicate if you intend to contest the matter. If you do not submit a notice of intention to defend, your creditor requests the court to issue a default judgment against you.
Relying on Unexpected Funding Sources
A common warning sign of potential debt trouble is regularly turning to unexpected sources of money to cover daily costs or debt repayments. If you often find yourself selling personal items, withdrawing from retirement savings early, or depending heavily on tax refunds to meet financial obligations, it could point to deeper financial difficulties. While selling belongings might provide a quick fix during an emergency, these methods aren’t sustainable solutions for managing debt in the long run.
Denied Loan Approval and Credit
If your loan applications are being declined, it’s a strong indicator of underlying financial issues. Similarly, receiving loan offers with unfavorable conditions, like excessively high interest rates, suggests lenders view you as a risky borrower, which often points to poor credit.
Your credit score and rating can be affected surprisingly easily. Missing bill payments or falling behind on debts can harm your credit, and consistent payment issues will only make things worse. Factors like your payment history, outstanding debt, credit usage, and overall credit activity all play a role in shaping your score.
You’re Concealing Your Purchases
Many people have experienced the urge to hide a purchase, like a new pair of shoes or something non-essential, simply to avoid admitting they bought something unnecessary. While this might seem harmless, making it a regular habit suggests a deeper issue.
Subconsciously, there could be a sense that these purchases are unaffordable, even if the money is technically there. Feelings of guilt about spending can often point to a larger, growing financial concern that needs attention.
Endnote
By recognizing these warning signs and addressing your financial challenges with courage, you can take control of your finances. Acting quickly to manage your debt allows you to make positive changes sooner. A wiser approach to achieving your goals is to set a savings target first and make purchases afterwards.
So, what do you think ?