Bankruptcy lawyers in Michigan know that rising interest rates and higher inflation also spark a rise in bankruptcies.

Perhaps you’ve over-extended yourself on your home during the recent boom, and rising interest rates are making your monthly mortgage payments harder to pay. Maybe you’ve had a medical crisis, and steep bills are dragging you down. Or maybe inflation has pushed the cost of everyday items high enough that you’re having trouble making ends meet.

Regardless of your situation, experts are warning of a coming recession, and everyone needs to prepare. What can you do? Taking a financial stress test now can help prepare you for any lean times ahead.

If you’re worried, before you search for bankruptcy lawyers in Michigan, what facts should you know about your financial situation?

1. Your Savings Situation

Most financial experts advise having two months worth of expenses in your savings to be protected against emergencies. But how many of us are able to actually do that? Studies show the majority of American households are living paycheck to paycheck – and that goes for both high- and low-income earners.

If your savings is low, take some steps to build it up again. Be brutal with your budget, and start cutting out expenses you don’t need. Trim back your subscriptions and expenses and see where you can save.

2. Your mortgage debt ratio

Home ownership provides some financial stability. If you’ve paid off your mortgage, or have been paying it down for a while, you have built up equity in your home. During tough times, you may be able to borrow against that value.

But if you’re a brand-new homeowner, most of your mortgage payments are probably going to pay down the interest on your loan. You haven’t had a chance to build up value in your home. Depending on your mortgage terms, your payments might even rise with interest rate hikes, meaning your monthly mortgage costs will be cutting into other necessary expenses.

Make sure you know where you stand. Review your mortgage statement with your lender, and know what happens if you default on a payment, or need to renegotiate your mortgage.

3. Your non-mortgage debt

Of course, a mortgage isn’t the only debt you may have. In fact, bankruptcy lawyers in Michigan and elsewhere often find that non-mortgage debt is what tips clients into a more precarious financial situation.

It’s easy for credit card debt to spiral out of control. If you’re only paying minimum payments each month, your debt can add up – quickly. Pay down high interest cards, or transfer the funds to a lower-interest loan.

4. Your insurance situation

Medical expenses have traditionally been one of the biggest factors in bankruptcy. If you are paying insurance premiums, keep your payments up to date. Consider insurance a necessity – you can’t assume you’ll stay healthy, and you may not be able to afford treatment if you’re not covered.

5. Your income stability

Take a moment to seriously consider your employment / income stability. If you’re retired, can you continue to count on a regular source of income? If you’re employed, is your job stable, and likely to survive a recession? If not, do you have a fallback plan in place?

How do you know if you need help?

If you’re hearing regularly from debt collectors, you’re worried about keeping up on your house payments, you need help. Bankruptcy attorneys in Michigan like Stephanie Krane Boehmer can help.

Stephanie can walk you through your financial situation, help you with debt settlement, talk to you about the pros and cons of filing for bankruptcy, and even provide alternatives to bankruptcy in Michigan.

A few minutes with a qualified bankruptcy attorney could help protect your rights, and put you back on the road to a more solid financial future.

If You Need Help with Rising Debt, Reach Out to Stephanie Krane Boehmer, Bankruptcy Lawyers in Michigan

As a bankruptcy attorney, Stephanie has extensive experience in bankruptcy laws in Michigan, and her warm and welcoming presence will make you feel at ease, and take some of the worry from your shoulders. Don’t wait until it’s too late. Contact Stephanie Krane Boehmer for a free consultation today. Confidential appointments available by phone, Zoom or in person.

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