Studies have shown that most filed bankruptcies are caused by a few specific reasons. Unexpected medical bills, divorce, and unemployment are the three biggest causes behind bankruptcy. However, these things alone do not usually lead to bankruptcy. Usually, people who are financially in jeopardy find themselves unable to avoid bankruptcy when these things occur. The signs of bankruptcy, though, are usually present long before bankruptcy actually happens. You may be vulnerable:

•If you are living paycheck to paycheck. If you are unable to put any money aside after you have paid your bills, then you are very vulnerable. If your paycheck were interrupted for any reason, such as unemployment or illness, you would not be able to afford living without borrowing. If you are living paycheck to paycheck, you would not be able to afford any debt payments or any unexpected expenses. Debt consolidation can help by helping you figure out where your money is going and by helping you afford your bills.

•If you have no savings. If you have not put any money away then any financial emergency such as unemployment or illness can leave you without money for the basics. With no savings, you would have to borrow in order to pay for the basics in case of an emergency, a risky practice that can quickly lead to unaffordable debt.

•If you have no financial emergency plan. Many people panic if they are unemployed or are faced with divorce or sudden expenses. This can be dangerous, especially if the panic leads to non-action. Just as you have a plan in case of a fire in your home, you should have a plan for dealing with a sudden financial emergency. Your plan may include assets you can liquidate to make money or extra expenses you can cut. By acting on your plan as soon as emergency happens, you can avoid bankruptcy.

•If you have large debts. If you have lots of debts, any emergency may make you unable to meet your debt payments, leading to bankruptcy. Debt consolidation can help you avoid bankruptcy by making your debt payments affordable and by helping you pay down your debts.

About The Author

Rachel Smid is a research analyst for http://www.SearchServices.ca and now hopes to share her expertise through publishing information on consumer credit. She wants to help others in their financial planning and debt managment. For more free tips, articles and debt resources, please visit http://www.mycdc.org/.

A Quick Note From The Publisher... If you like the article above, you may be interested in the following article which is also related to Debt Consolidation... Credit Card Counseling And Debt Consolidation Have you ever had one of those days where bill collectors were getting on your nerves and you didn't know what to do? You though, "if I had a credit card on hand, it would take care of my debt problems!" And then you probably thought "…if only I applied for a credit card." I am going to provide you with a small list of the cheapest credit cards available (in terms of annual fees and interest rates), as well as some credit debt consolidation counseling. The rate of interest on a credit card is one of the chief factors you should focus on when considering a credit card. High rates of interest can lead to higher bills, which is why you should always look for cards with the lowest rates, especially if you plan to transfer debt to the card. Citi® Platinum Select® Card, for instance, offers 0% APR for nine months, and 9.49 APR after the introduction period. Chase Platinum Visa®/MasterCard®, a comparable competitor card, offers 0% APR for six months and as low as 8.74 APR after the...

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