Thomas F. Miles, Attorney and Counselor at Law
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What is the best way to address unmanageable debt?

Consumers in California who are exploring ways in which to resolve debt issues may consider applying for a personal loan. There are some advantages to using a personal loan to settle unmanageable debt. Such a loan can be used to pay credit card debt or to refinance existing loans. Before applying for a personal loan, it makes good sense to research the best interest rate available, because that is what makes a personal loan a better choice than a credit card.

The interest on credit card debt is significantly higher than on a personal loan, and any consumer will benefit from lowering interest expenses on outstanding debts. Personal loans are typically amortized loans, and the monthly interest along with the principal repayment is included in the monthly payment. This means that the complete loan will be paid off by the end of the term. It also allows for easier budgeting, and a personal loan provides no opportunity for impulse buying.

However, some consumers may be in situations in which they are unable to make any payments -- not on credit cards, nor on personal loans. The best option for them may be to explore their options under the U.S. Bankruptcy Code. A personal bankruptcy filing protects consumers against creditor harassment, wage garnishment, foreclosure and more. Some unsecured debts may also be discharged in bankruptcy.

Sometimes, people want to try and resolve unmanageable debt issues themselves, rather than filing for bankruptcy. Unfortunately, in many cases, it can lead to an ever increasing spiral of debt, with no improvement of the situation. A consultation with an experienced California bankruptcy attorney may provide a consumer with the relevant information. A lawyer can assess the client's circumstances and explain the available options for attaining a fresh financial start.

Source: bankrate.com, "Personal loan vs. a credit card", Dr. Don Taylor, March 20, 2016

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