Credit card debt is one of the most common reasons people seek debt help. It is easy to overspend when you aren’t paying cash and you aren’t held responsible for paying immediately. The interest built into this type of credit can add up quickly, especially if the balance isn’t paid in full or on time every month. And because accounts are being managed online it is much easier to overlook or disregard the added interest.
However, bankruptcy can address much more than just credit card debt. A free bankruptcy consultation with a practicing attorney will clearly indicate what will happen with any debts you may have incurred. Each case differs based on the chapter filed and debts the filer may want to maintain. Although you can’t pick and choose which debts to include in your bankruptcy, you do have some freedom to request to keep some debts. For example, you may request to keep making payments on your car loan because it is the only transportation available to get you to work.
Common Debts & Issues that Cause Debt
Poor Money Management
Poor money management includes credit card debt but extends to gambling, poor spending habits, lack of budgeting and more. Having money requires a certain amount of responsibility. You should be aware of how much money you have so you know how much is free to spend.
Lack of Savings
A lack of savings can result because you choose not to save money or you are unable to save because you need every penny of income to pay monthly expenses. Savings can prevent debt because it prepares you for unexpected expenses. If you are in a car accident, for example, you may need to pay for unexpected medical expenses, car repair expenses and maybe increased insurance. Having a savings to fall back on can save you from debt in situations like these. However, it is not always possible to build up a savings account to protect you from unforeseen circumstances.
Income Loss
Loss of income is fairly common in today’s economy. Jobs are being cut and employment opportunities are few and far between. Divorce can also result in income loss, in addition to other financial troubles. Income loss can be very detrimental, especially if you are relying on it to pay monthly expenses. If your budget is impossible to maintain without that income, financial trouble is inevitable unless a quick income replacement is found.
Investment Debt
Investment debt such as student loans, car payments and home mortgages can easily add up to an insurmountable volume. Investment debt often refers to appreciative items, or things that add value over a period of time. For example, student loans pay for an education that will help you get a well-paying job. This debt typically involves large quantities of money, added interest and spans a long period of time.
Whether your student loans are becoming unmanageable, your job loss is quickly depleting your savings, an unexpected medical emergency transpired or for any other reason your financial situation has spun out of control, talk with a bankruptcy attorney and discuss solutions for your troubles. A free consultation will assess your circumstances and recommend the proper path to regain financial control.
Preparing for and Dealing with Debt
Debt can happen to anyone at any time - even if you are prepared for a bump in the monetary road. Although credit card debt is very common and widely recognized, it isn’t the only cause for debt. It is one of many types of debt that people face every day. Knowing the types of debt and common issues that trip up responsible money management may help you avoid debt but will undoubtedly prepare you for dealing with it if it arises.
Request a bankruptcy free consultation for legal advice regarding your specific debt and financial situation.
Sources:
http://credit.about.com/od/avoidingdebt/a/goodvsbaddebt.htm
http://www.lifehack.org/articles/money/7-causes-people-get-into-debt.html
