What Are the Ways to Detect Bankruptcy?

For individuals, bankruptcy is not just a matter of telling a judge “I’m broke!” There is a process that debtors must go through, and it requires compiling financial records including debts, assets, and income. This gives you, anyone helping you, and the court a clear picture of your current financial situation.

You can get a sense of your current debt load by looking at your credit report, which details your accounts including credit cards, lines of credit, mortgages, car loans and student loan balances. However, some debts won’t be listed on your credit report, such as medical bills, some personal loans, payday loans and tax debts. You can also get a sense of your current financial position by running some simple financial ratios, such as cash flow to debt ratio and debt to equity ratio.

For corporations, a clear sign of impending bankruptcy is a “bleedout” — where a company that is struggling starts to shift customers, inventory and processes to a new corporate entity in order to avoid liquidation. A quick check of land records and the company’s bankruptcy filings will often reveal these transfers.

A bankruptcy filing is a public record that can hurt your future ability to obtain credit and make it difficult for you to find a job or a place to live. It can even affect your ability to get certain insurance coverage or to work in some professions. Fortunately, there are many ways to protect yourself from bankruptcy risk by integrating monitoring throughout the customer engagement process – from pre-screening and up-selling to retention and loyalty programs.