Debt Consolidation Before Bankruptcy
Posted on February 16, 2009
Filed Under General | 5 Comments
Establishing and maintaining good credit can be tricky. It can be hard to balance the need to have a good credit standing with what you can realistically afford. As a financial advisor I have people coming through my door everyday that thought they were in control of their money only to realize that they were up to their eyes in debt with no feasible way of getting out of it.
For most people the issue is credit cards. They can be easy to get and the more you have, the more that are offered to you. Also, the higher your outstanding balance, the easier it is to get your credit limited increased. The problem is when you have several cards from different companies and you start having trouble paying off your monthly minimum balances. Add that onto any personal loans a person may have and it spells trouble.
Most people who come to see me are one step away from filing for bankruptcy. But there are other solutions, one being debt consolidation. If you have decent credit you may be able to take out a loan to pay off all of your outstanding debt. This way you only have one payment to worry about and quite often it’s lower than the original debt payments. And it is a much better option than filing for bankruptcy or accruing bad debt.
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5 Responses to “Debt Consolidation Before Bankruptcy”
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I know too well how easy it is to get further in debt, especially in the culture of “don’t miss this opportunity!” you don’t want to forgo an experience for financial reasons. I nearly went bankrupt after a few years living abroad. It’s dangerous because I don’t want money to hold me back, but I don’t want debt either.
The problem with debt consolidation is that if you don’t have good credit, you’re not going to get a good loan. If you have good credit, you’re not in trouble to start with. It’s a nightmare, and one that an increasing number of people are finding themselves in.
Well, what about the issue of not getting a credit card to start with? I’m young and want to establish credit so one day I can buy a house, but I can’t do that because every company says I have to have credit to get credit. Well how to I start having credit? It’s a crazy system!
What are the other solutions? My husband and I do not have very good credit at the moment, and we’re finding ourselves in some very serious trouble. I’ve been told we won’t get approved for a debt consolidation loan, and honestly I don’t know what to do. Maybe I can make an appointment with you!
How much debt do you think the average American should just be comfortable with? Is there any amount of debt that’s ok to have? I think it’s tricky to get an honest reading from the market today; should the goal be to have NO credit, some credit, or only asset based credit like houses and cars?