As Americans’ Debt Burdens Become Harder to Bear, Many Find Relief with Bankruptcy

Are Americans addicted to debt? A recent story in USA Today suggests that the answer is unequivocally yes.

More than one in three U.S. consumers currently has a debt in collections, according to the article. As of 2013, the average American carried $38,000 in mortgage debt and almost $16,000 in non-mortgage debts such as credit card debt, student loans and medical bills.

Not surprisingly, few debtors can manage to pay down such large balances in a realistic time frame. Instead, many of us slowly chip away at what we owe. In some cases, our debts may continue to grow - even as we make payments.

Struggling under the weight of too much debt can prevent young adults from starting their lives, stop middle-age Americans from achieving their dreams, and keep seniors from being able to afford retirement. At its best, debt is limiting; at its worst, it’s suffocating.

So what are your options when it becomes obvious debt has grown beyond your reasonable control? There are several paths you can take.

Enlist Expert Advice

Obtaining counsel from financial advisers and other experts can be a wise move – if you proceed with caution. Keep in mind that many companies claiming to help lower debt can actually make your debt situation worse.

Your best bet is to seek out a reputable nonprofit credit counseling agency to assist you with managing your out-of-control debt. Of course, nonprofit doesn’t always mean free or low-cost. However, reputable firms should offer a complimentary consultation and reasonably priced services. Before you commit to working with a company, make sure their terms of service are clear up front. A good rule of thumb is to choose a debt management or credit counseling agency that is associated with an esteemed organization such as the NFCC and Association of Independent Consumer Credit Counseling Agencies.

Steer clear of debt settlement and debt consolidation companies that may refinance your existing balances with new loans. To make matters worse, debt settlement companies will often require you to stop making payments on debts while they negotiate with creditors. Meanwhile, nothing is done to stop bill collectors from calling or late fees and credit damage from accumulating. In some cases, companies never even contact creditors, leaving you with more debt than before – plus the expense of the “debt settlement.”

Seek Out Better Terms

Many of the tactics that so-called debt settlement companies claim to use, you can employ yourself at no cost. If you can’t afford your debts, it’s within your rights to call up creditors and try to negotiate more realistic terms – from a lower interest rate to a modified outstanding balance. In the best-case scenario, it may be possible to significantly reduce your debt burden. At worst, they can simply say no.

If creditors refuse to work with you, you may be able to save money by transferring credit card debt to a card with a lower rate. However, be cautious of too-good-to-be-true introductory rates that are only good for a short period of time before bouncing back to sky-high levels.

Eliminate Debt For Good with Bankruptcy

The reality is that, sometimes, solving a debt problem on your own just isn’t possible. After all, if it were really that simple, why would so many Americans still be swimming in credit card balances, doctor’s bills, student loans and so on? What begins as a couple late payments can soon escalate into a problem you don’t have the power to fix, no matter how hard you try. But there’s hope – for many people, bankruptcy can help.

Depending on the chapter of bankruptcy you file, it could be possible to pay off your debts through an affordable repayment plan – or wipe out debts entirely. Meanwhile, filing for either Chapter 13 or Chapter 7 bankruptcy puts an immediate stop to foreclosure, repossession and creditor harassment. An experienced bankruptcy attorney can help you choose the most advantageous form of bankruptcy for you and your family.

If you’re dreaming of a debt-free future, bankruptcy can make your vision a reality. Contact DebtStoppers today to schedule a free personal debt consultation with one of our bankruptcy attorneys. Together, we can help you break free from your debt burden so you can move forward with your life.

USA’s love affair with debt is a problem, by Robert Powell, USA Today

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