Thomas F. Miles, Attorney and Counselor at Law
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Examining the causes of unmanageable debt

For many California consumers, the solution to extreme levels of debt is a successful personal bankruptcy action. By moving through the bankruptcy process, many forms of unsecured debt can be discharged, leaving the consumer free of any obligation to repay those accounts. In the months and years following a bankruptcy, it is essential that consumers make an effort to learn the reasons why they found themselves facing unmanageable debt, so that such difficulties do not arise in the future.

One of the most common causes of serious debt problems is a scenario in which an individual or family experiences a reduction in income but continues to spend money at the same level as before that drop. Over time, the result is increasing debt, with a lowered ability to pay for those obligations. For some, the spending has little to do with need and is mostly done to keep up certain appearances. Debt should never accumulate unless it is necessary, and maintaining an appearance of success is never a necessity.

Another reason why many individuals fall into unmanageable debt is an addiction to the accumulation of new "stuff." Purchasing items just for the sake of buying something new is a dangerous habit and one that can easily lead to excessive debt. Even worse, individuals who buy stuff for no good reason often gain little or no pleasure from the things that they own. It is an issue of acquisition, not of ownership.

These are just a few of the factors that can lead to unmanageable debt. In reality, each individual or family is unique, and will have a unique set of spending and saving habits. By understanding how one approaches money and debt, it is possible to identify problem areas, which can lead to improved habits. For those in California who are able to shed their debt through a successful personal bankruptcy, it is absolutely imperative to understand how that debt was created, so that the same outcome can be avoided in the years ahead.

Source: NASDAQ, "Frequently In Debt? Discover Your Personal Pitfalls", Joe Young, March 25, 2015

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