Financial problems often bleed into other parts of our lives like relationships, work, and mental health. If you're struggling with debt, you're not alone. In fact, total consumer debt in the U.S. is around $14 trillion, including mortgages, auto loans, credit cards, and student loans. That's a considerable number, and many Americans understand these statistics on a personal level. However, it's important to know that there are ways to get the debt relief you need. Keep reading to learn more.
Why Am I In Debt?
Many people can trace their money troubles back to unemployment due to COVID-19, student loans, or credit cards, while others have been in debt for as long as they can remember. In general, rule #1 of debt is that it takes time. Consumer debt doesn't happen overnight, and in fact, some financial trends go all the way back to the introduction of the credit card in the 1950s and overspending in the 80s.
Credit card debt is a familiar concept for many Americans, with total credit card debt reaching nearly $829 billion in 2019. Credit allows the consumer to "buy now, pay later," but not all credit card debtors use credit to buy consumer goods. Many Americans use credit cards to pay bills, buy necessities, and stay afloat.
Understandably, student loan debt is a "four-letter" word for millennials, recent graduates, and current students. A recent report shows that Americans owe approximately $1.5 trillion in student loans as of 2019. As interest rates and tuition continue to climb ridiculous heights, so does the pressure to get a degree.
While credit card debt and student loans are some of the most prevalent debts in the U.S., other contributing factors include:
- Mortgages
- Medical bills
- Reduced income
- Changing cost of living
- Costly divorce
- Job loss
- Failed Investments
Regardless of the reasons why you may be in debt, your situation isn't hopeless. Thankfully, there are many debt relief solutions to choose from. Some options aren't for everyone, but one way to begin to take back your financial freedom is to consolidate your bills.
How Do I Consolidate My Bills?
There are a million and one reasons why people may be in debt, so it stands to reason that there would be more than one consolidation option. In general, consolidation helps isolate your debt into more manageable pieces or target specific types of debt exclusively.
- Bankruptcy sounds scary, but it is a legitimate debt consolidation option for many people. Depending on the amount of debt you owe, you can either file for Chapter 7 (liquidation) or Chapter 13 (reorganization). Bankruptcy can help you discharge some of your debts and focus on financial recovery.
- Loan consolidation doesn't lower the amount of debt, but it does reduce the number of creditors knocking at your door. With loan consolidation, debtors can make one payment over the course of several years without the hassle of paying money to each creditor individually.
- Debt verification tackles creditor error specifically. Essentially, this means that there might have been a clerical error that caused you to owe a debt that's not yours. By verifying your debt, you can remove payments that aren't yours to pay and focus on debts you do owe.
- Cutting expenses and/or maximizing your income is the most time-honored method for debt consolidation, and most financial advisors will tell you to start here first. However, knowing what to cut and how to maximize your income is easier said than done.
All of these consolidation methods can help you prioritize what you owe to pay it off, but you should NEVER attempt to consolidate your bills without the help of an experienced attorney. Why? Well, attorneys have the knowledge and experience to guide you through the consolidation process and avoid making mistakes that could lead to legal consequences down the road. Plus, let's face it, most financial documents are hard to understand at the best of times, and it's easy to make mistakes.
If you're struggling with a mountain of debt, the Law Office of Seni Popat, P.C. has the tools you need to help you conquer it and build a solid financial future. Contact our office today!