In this study, we investigated the neural basis of virtual time to contact (VTC) and the hypothesis that VTC provides predictive information for future postural instability. A novel approach to differentiate stable pre-falling and transition-to-instability stages within a single postural trial while a subject was performing a challenging single leg stance with eyes closed was developed. Specifically, we utilized wavelet transform and stage segmentation algorithms using VTC time series data set as an input. The VTC time series was time-locked with multichannel (n = 64) EEG signals to examine its underlying neural substrates. To identify the focal sources of neural substrates of VTC, a two-step approach was designed combining the independent component analysis (ICA) and low-resolution tomography (LORETA) of multichannel EEG. There were two major findings: (1) a significant increase of VTC minimal values (along with enhanced variability of VTC) was observed during the transition-to-instability stage with progression to ultimate loss of balance and falling; and (2) this VTC dynamics was associated with pronounced modulation of EEG predominantly within theta, alpha and gamma frequency bands. The sources of this EEG modulation were identified at the cingulate cortex (ACC) and the junction of precuneus and parietal lobe, as well as at the occipital cortex. The findings support the hypothesis that the systematic increase of minimal values of VTC concomitant with modulation of EEG signals at the frontal-central and parietal-occipital areas serve collectively to predict the future instability in posture.