Some people may have heard about the debt crisis in the United States. However, not everyone knows what this means. There are several ways people can fall into debt. Sinking into debt is what scares most people due to the fear of bankruptcy. A variety of methods can be used to escape and control your debt. Feel free to reach out to a Kingsport bankruptcy lawyer if you ever find yourself falling into bankruptcy.
WHAT IS THE DEBT CRISIS?
The United States debt crisis is described as a period when most Americans are struggling with debt. After the COVID pandemic, many people have found themselves falling deeper into debt, with some people slipping into bankruptcy. There are four main ways people can fall into debt:
- Auto debt
- Credit card debt
- Home debt
- Student loan debt
Most people cannot afford the full payment of a new or used car. Some used cars might be affordable with cash while others may require a car loan. Car loans create auto debt that can build with interest if payments are delayed or missed. When unexpected financial challenges arise from situations like COVID, many people struggle to meet those monthly payments.
Credit card debt comes from using credit cards to spend money on anything the person cannot afford with their current savings. Like loans, credit cards come with interest rates that increase the money that was spent. Unlike loans, people using credit cards can control how much money they owe. Monthly payments are limited to how much money a person spends with the credit card, plus interest.
Home debt comes from home mortgages, a deal made between the person and a bank to make monthly house payments. Falling too far behind on these payments could lead to foreclosure and the loss of your home. Student loans affect many people who started or finished college. These also build up with interest rates and may not always be escapable with bankruptcy.
HOW TO ESCAPE DEBT
There are several steps you can take to escape or reduce your debt. One of the most effective ways to pay off debt is to make the maximum monthly payments you can. If you want to escape debt faster, try the method of paying more towards your lowest debt first. What happens is you pay off that debt faster, removing interest for that debt.
Other debt management techniques include negotiating with your creditors and lenders. When you find yourself falling behind on auto or home loans, contact your lender. See what financial options are available. Some lenders will extend the repayment period or lower your interest rates.
Talking to a credit counselor might also. When these methods fail, debt settlement or bankruptcy might be the last resort.
BANKRUPTCY LAWYER IN KINGSPORT, TN
Finding out you might fall into bankruptcy can be stressful. Contact us at Tom Bible Law by dialing (423) 690-7712 for a consultation today to see what options might be available. Our team of Tennessee bankruptcy attorneys is prepared to help you explore what steps you can take regarding bankruptcy. We are located throughout the Tennessee cities of Chattanooga, Kingsport, and Tullahoma.