America Saves Week serves as a reminder about the importance of saving, and that fact that it’s never too late become fiscally responsible. It also raises awareness of the need to reduce debt in order to build wealth. For starters, let’s review some of the most common areas that Americans find themselves overwhelmed with debt:
Most Common Types of Debt to Eliminate
- Credit Cards. Low monthly payments make credit card debt appear to be affordable. However, the opposite is true; high interest rates and excessive fees make this debt especially difficult to overcome. It takes a big commitment and patience, to pay off cards…starting with the highest interest rates first. If you find this task daunting, keep in mind that in many cases, bankruptcy can eliminate all credit card debt.
- Student Loans. Credit card and Student Loan debt problems are hitting young borrowers the hardest. In this slow economy, older people are holding on to their jobs longer. Companies have reduced workforce and full time is increasingly being replaced with part-time work. Half the hours equates to half the pay, leaving monstrous loans nearly impossible to pay off….even with a job. If student loans prove to impose an undue hardship, they may be discharged in bankruptcy. (Courts use different tests to evaluate whether a borrower has indeed an undue hardship.)
- Medical Bills. The scary thing about medical debt is that it’s highly unexpected; many Americans hadn’t saved, and don’t have insurance to prepare for this. With a serious illness or catastrophic accident, medical bills build quickly in a short period of time. If you find yourself overwhelmed with this type of debt, bankruptcy may be a good option for eliminating past medical bills.
- Mortgage and Vehicle Loans. All it takes is losing a job for a couple of months, and payments on both home and auto can fall behind. Both types of loans are examples of secured debt. If you become delinquent on them, the lender can foreclose or repossess the property. Outstanding mortgage debt and large amounts on a vehicle loan may be discharged through bankruptcy. More importantly, bankruptcy may prevent home foreclosure or vehicle repossession.
The definition of wealth, and how to achieve it, will be unique for each individual and family unit. The first step towards reaching any goal is to have a plan. Part of that plan should be to eliminate debt. Don’t hesitate to reach out to an experienced bankruptcy attorney for debt advice. If you so choose to file bankruptcy, they can help ensure you get the most out of your case. For more information on “America Saves Week,” including how to create and commit to a basic savings plan, visit https://www.americasavesweek.org