Bankrupt! The Dangers of Debt
It is unfortunately rather easy to accumulate debt over the course of life. In fact, many consumers begin accruing credit card debt and student loans in their college years, and they may also take on a car loan. After college graduation, it is common to take on a home mortgage and to accrue additional debt maintaining a lifestyle, outfitting the home and raising a family.
In addition, unforeseen circumstances and personal tragedies such as serious illnesses, the loss of a loved one, the loss of a job and other factors all can increase a problem with debt. While some individuals are able to control and even reduce debt, others take on more debt until they have reached a precarious and burdensome financial situation. By understanding the dangers of debt and ultimately of filing for bankruptcy, you may make a concerted effort to reduce your debt balances or to seek assistance.
Your Credit Rating
Your credit rating essentially gives creditors a better idea about how creditworthy you are and about how risky it may be to extend a loan to you. A credit rating may also be reviewed when you apply for a job, a new insurance policy, utilities or phone service and more.
Late payments and collections accounts can have a dramatic and negative impact on your credit rating. However, even when you are able to manage to make your payments on time, high account balances or many open trade lines can also lower your credit rating. If you do need to file for bankruptcy, you will have this showing on your credit report for seven years, but you may enjoy a financial fresh start to rebuild.
The Inability to Prepare for Emergency Situations
In addition to the damage that your debt may be doing to your credit rating, it is important to note how high levels of debt impact your current financial situation. High account balances and numerous personal loans equate to decreased extra cash to use to build an emergency savings account or to pay for unexpected expenses.
The fact is that people commonly term medical bills, car repair bills and other expenses they did not plan for as unexpected. In reality, it is impossible to live without these expenses in your life, so you should plan for them by accounting for them in your budget or with an emergency savings account.
Lack of Planning for the Future
Likewise, debt can also minimize or eliminate your ability to plan for the long-term. Many people are behind on their efforts to save for retirement, and one common reason is because they lack the funds to do so. By controlling debt balances, you can more effectively save money for retirement. In addition, funds can be saved for other long-term plans, such as paying for the kids to go to college, saving to buy a home and other goals.
How a Bankruptcy Service Can Help
When possible, it is ideal to decrease debt balances on your own. However, when debt balances are too high, it may be most beneficial to seek the support and assistance of a bankruptcy service like Harris & Partners Inc. A representative may review your financial situation closely to help you to determine what the best course of action for you is.
The fact is that debt can be dangerous on many levels. It can impact your current, short-term and long-term financial situation. It can affect your personal, family, and work life. Because of this, you may consider the steps that you can take to improve your situation or find other possibilities that will work for you.
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Category: Bankruptcy
