Thomas F. Miles, Attorney and Counselor at Law
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Repayment programs may not ease unmanageable debt

Many California consumers are highly distressed at the volume of unpaid debt they are facing. Even when bankruptcy seems to be the best possible course of action, many individuals will make a concerted effort to repay their debts. One option is a repayment plan, which can help consumers gain control of unmanageable debt. Not all such programs are created equally, however, and some can cause more damage than relief.

One reason why debt repayment fails is in situations in which an individual's budget is simply not reasonable. When income is not sufficient to cover both repayment and the basic costs of living, success is unlikely. The same can be said of repayment plans that are too optimistic or aggressive to be reasonable.

Another problem comes in when consumers begin a repayment plan without having an emergency fund in place. Repayment plans require stringent adherence to the agreed-upon terms. Missing payments can void the entire agreement, and can leave a consumer right back where they started. When there is no emergency fund in place, something as simple as a surprise car repair or root canal can lead to missed payments and a voided repayment agreement.

When considering options to address unmanageable debt, California consumers must take care to choose a path that fits their own unique financial scenario. Debt repayment can offer a good fit for some, but for others, it can actually make matters worse. Choosing a debt relief plan is a serious matter and should be addressed only after all avenues have been researched, including filing for personal bankruptcy.

Source:, "7 Reasons Your Debt Repayment Plan Isn't Working", Allison Martin, Oct. 25, 2014

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Thomas F. Miles, Attorney and Counselor at Law
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