When it comes to battling that mountain of debt, you may believe that there are certain debt repayment strategies that will work. After all, you've seen them touted again and again on many financial websites and magazines. You know that with diligent repayments, plenty of patience, and some good luck, you will be back on your way towards a debt-free lifestyle...
Actually, some of the most popular debt repayment strategies will only delay the inevitable. What's worse, many will keep you in the cycle of debt for much longer than what you need to be. Therefore, if you are ready to break free from the debt cycle, take a look at why you're better off declaring bankruptcy, rather than using these debt repayment strategies:
Transferring Card Balances
When you have a mountain of credit card debt to deal with, it might seem like a great idea to keep transferring the balance to new cards with zero percent interest rates. After all, the idea behind this debt repayment strategy is that it allows more of your minimum payment to go towards the principal balance, thus reducing the time you will spend paying off the total debt.
However, this theory rarely plays out in practice. Unless you've developed incredible willpower, it can be all too tempting to use the credit cards with zero balances. Suddenly, you are not just paying off a single credit card - you're tackling multiple cards with multiple balances. Add to the fact that interest rates after introductory periods can be sky-high, and it's no wonder this debt repayment often fails.
Much like with transfer balances, debt consolidation is often used before declaring personal bankruptcy. However, with a second glance, it becomes apparent that many individuals would be better off filing for a Chapter 7 or Chapter 13 bankruptcy . Debt consolidation loans often come at a high price, thanks to risky interest rates. And once again it can be all too tempting to use the credit cards freed up by the debt consolidation loan, and it's no wonder consumers end up in more financial trouble than where they first began.
When it comes to paying back your debts, you'll want to make sure that it's actually something you can do. The only debt repayment strategies that work include earning more money at work, starting a second business, or suddenly coming into more cash. If these debt repayment strategies aren't in your near future, it might be time to contact a bankruptcy lawyer to discuss your options.