Debt has become a huge problem for consumers throughout Texas and the rest of America. U.S. citizens collectively owe $1.41 trillion in student loans, $1.23 trillion in auto loans and $815 billion in credit card debt. However, there are several important steps a person who wants to get out of debt can take.
A debtor should make sure they understand how the terms of their loan affect payments and interest. For example, the amount of interest may be compounded by being added to the principal amount of the loan. This means that interest will then be charged based on the combined amounts.
It is important for consumers to consider the types of debt that they have. Loans with very high interest rates should be paid off quickly. If an interest rate on a loan is low, it may be better to invest the money that could be spent paying off the loan rather than pay it off quickly.
Debt settlement is an option for some debtors. However, creditors are usually unwilling to settle until the debtor has already missed several payments. For debtors who are current on their payments, debt settlement is usually not a good option.
Bankruptcy is often a great way to get a financial fresh start. Most debtors choose to file Chapter 7 bankruptcy, which allows debts to be dismissed in exchange for liquidation of all non-exempt property. However, some debts like child support may not be discharged by bankruptcy. An attorney may be able to explain which types of debts are dischargeable.