You’ve heard of the terror security threats; now let me introduce you to the bankruptcy financial health zones:

• Green Zone: No Need for Bankruptcy. Your level threat is low as your income exceeds your expenses, and you have enough savings or assets to ride out any crisis. You are in the green level if you:
o Pay all your bills on time
o Have assets, including healthcare coverage, to carry you through emergencies
o Have no credit card debt or slowly reducing your credit card balances every month
o Save money each month

• Blue Zone: Make Financial Changes. At this state, your threat level is guarded. You don’t need to resort to bankruptcy. But you should get serious about proper budgeting and curbing your spending. You are in the blue level if you:
o Fear losing your job
o Cant pay off your credit cards and have increasing debts
o Have both secured debts (like a car loan or mortgage) and unsecured debts (like credit cards or personal loans)
o Do not save money each month

• Yellow Level: Consider Bankruptcy. At this stage, your threat level is elevated. Perhaps you’re experiencing a personal issue (such as divorce) or a professional setback (such as a layoff). Whatever the reason for your economic difficulties, now is the time to negotiate with your creditors and consider all your financial options. You are in the yellow if you:
o Fall behind in paying some secured or unsecured debts
o Get phone calls from debt collectors
o Have little or no savings
o Have been out of work for one month or more

• Orange Level: Strongly Consider Bankruptcy. At this stage your financial problems have worsened over a period of many months, perhaps as long as a year. You should strongly consider contacting a bankruptcy lawyer. You are in the orange level if you:
o Are more than 60 days behind on paying more than one bill
o Use new credit cards to pay the minimums on other credit cards
o Have pending lawsuits against you
o Cant pay off your unsecured debts in full within five years
o Owe big medical bills or taxes that you can’t pay
o Have been out of work for more than three months

• Red Level: File for Bankruptcy Immediately. At this stage, your threat level is severe. You are likely undergoing extreme financial stress because of past-due bills and legal actions taken against you by various creditors. You are in the red level if your:
o Unsecured and secured debts can’t be paid
o Wages have been garnished
o Bank account has been tapped via court order
o Car has been repossessed (or will be soon)
o Home is set for foreclosure sale
o Unemployment benefits are ending or you have no income