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Payday loans do not provide debt relief

It is not uncommon for people in Connecticut to find themselves short of cash with days to go before the next paycheck. Whether it happens because of poor planning or unforeseen circumstances, it is never a pleasant feeling. In fact, it may bring a sense of panic if there are bills left unpaid and necessities to purchase. While it may seem like temporary debt relief is better than none, some find themselves digging deeper into debt by using quick fix loans in times of desperation.

Actually, payday loans capitalize precisely on that feeling of desperation. Lenders provide small amounts of money for short periods of time with little-to-no credit check. The borrower merely signs a contract agreeing to repay the money at a certain time, usually within a month or less. The borrower may be required to leave a post-dated check or provide the lender with access to a checking account to electronically withdraw the money.

Credit card debt still common reason for Chapter 7

Shopping with a credit card has its advantages. Along with the convenience and the ability to purchase items that may otherwise be unaffordable, some credit cards offer perks for their loyal customers. However, consumer advocates may be concerned about the dramatic increase in the required spending to earn those attractive perks, especially since credit card debt is one major factor when consumers in Connecticut and elsewhere file for Chapter 7 bankruptcy.

A relatively new trend with more prestigious credit cards is the signing bonus. These perks are offered to customers who spend a certain amount of money within the first few months of opening the card. Some of these bonuses include hundreds of dollars worth of air travel credit, free stays in hotels and bonus points that can be used toward shopping or travel.

Sorting through advice for debt relief

Everyone has advice for dealing with life. An expectant mother may hear advice from total strangers, and someone heading off to college may feel crushed by the amount of advice offered. The same may be true for anyone struggling with debt. In many cases, those in Connecticut longing for debt relief may keep their problems secret to avoid the perceived judgment and well-meaning advice of others. For example, much financial advice centers around budgeting.

To control debt, advisors recommend controlling spending. Keeping a budget may help one manage how and where the money is going. This may allow the consumer to see the areas in which he or she is overspending and encourage more efficient and prudent use of money. A budget may also help someone reduce debt by shifting spending from unnecessary items to retiring the debt.

Asset forfeiture can be an unfortunate consequence of debt

Falling behind on certain bills can be scarier than falling behind on others. For example, the delinquency of a secured loan may carry consequence of asset forfeiture that an unsecured loan does not. No one in Connecticut wants to go through the foreclosure of a house, but the repossession of a vehicle can be just as traumatic and embarrassing. Without a vehicle, one may lose the only means of getting to work or fulfilling family obligations.

The creditor who finances a borrower's vehicle can legally begin the process of repossession as soon as the loan becomes delinquent, that is, as soon as the borrower misses a payment. This is because until the borrower pays back the entire loan, the lender essentially owns the vehicle. Because many lending contracts include the understanding that the lender has the right to repossess the vehicle for non-payment, no court order is necessary for the lender to begin the process. The lender may not even send you a letter of warning.

Chapter 13 bankruptcy provides relief in many situations

When the struggle to pay bills and keep food on the table becomes too great, Connecticut residents may explore options for debt relief. If alternatives for consolidating loans or avoiding creditors have failed, bankruptcy may be the best solution. Those who have a steady income will likely consider Chapter 13 to get their finances under control. Chapter 13 has several advantages over Chapter 7 liquidation bankruptcy.

In Chapter 7, it may be necessary to liquidate one's assets, sometimes including the family home. The money from liquidation is then used to pay the debts owed. However, Chapter 13 halts any foreclosure on one's home and allows the filer to continue making payments under an adjusted plan. Likewise, other secured debts may be rescheduled, their payments extended over the life of the bankruptcy. This often lowers the payments allowing the filer to more easily keep up.

Weighing the pros and cons of Chapter 7 bankruptcy

For those struggling every month to pay their bills, harassing phone calls from creditors, warning letters in the mail and the sinking feeling when the doorbell rings may be part of everyday life. They may daydream of having all their debts magically disappear so they can start fresh. For many in Connecticut in this situation, Chapter 7 debt relief may be a possibility.

Chapter 7 bankruptcy involves the liquidation of assets to pay down debt. After that, the balance left on some debts is often forgiven by the creditor. Each state carries certain exemptions for assets a person can keep from liquidation, for example a home or car, but many luxury items will likely be included in the liquidation. Those filing for Chapter 7 must give up their credit cards, but after a certain time, they will be able to begin rebuilding their credit.

What protection does Chapter 13 bankruptcy offer?

Consumers in Connecticut who have experienced unanticipated financial difficulties due to job loss, medical emergencies or other reasons may be exploring ways to get back on track. While some spend valuable time trying all kinds of remedies and getting deeper into debt, it might be worthwhile to research the protection offered by personal bankruptcy. The most attractive advantage of Chapter 13 bankruptcy may be the automatic stay that becomes effective as soon as the consumer files for bankruptcy.

The stay could prevent foreclosure on the person's primary residence. It may also halt wage garnishments, and a stay could keep other secured possessions like a car safe from repossessions. Any lawsuits filed by creditors will be stopped, and they have to hold back further billing. Furthermore, creditors and debt collection agencies have to cease telephone harassment, and they will have to deal with the attorney rather than the consumer who is under bankruptcy protection.

What to make of charged off debt?

If you learn that a troublesome debt is being charged off, you may be delighted with relief because the creditor is no longer chasing you down to pay that debt. While this may sometimes be the case, the obligation may still have a negative effect on your financial well-being.

This post will explain why.