Many Americans carry credit card debt, which can be one of the most difficult forms of debt to pay down. For some Connecticut residents, options like a personal loan can help to pay down high balances. For others who are in more serious financial straits, a Chapter 7 bankruptcy filing might be a more appropriate way of handling mounting debt.
Personal loans are often used as tools for “debt-busting” thanks to their comparatively low interest rates. A good personal loan can have an interest rate starting as low as 5% for those with good credit, as compared to the average APR of 18% for most credit cards. This lower rate allows a loan to be paid down faster than credit debt, which tends to gather more interest more quickly.
Personal loans do not require collateral, as they are backed only by the borrower’s ability to pay back the amount in a set time. Personal loans are amortizing, which means every payment goes toward paying down interest and the principal amount. A negotiable repayment term means the ability to budget for monthly payments that will pay down the loan in anywhere from two to five years.
Of course, personal loans are most attractive to those with good existing credit. For some Connecticut residents, credit scores can deteriorate over time under the weight of credit card debt, making personal loans an inaccessible option. For those individuals and families, a Chapter 7 bankruptcy filing could be used to pay down existing debt, with the bankruptcy court having the option to forgive certain unsecured debts depending on the individual case of the borrower.