Common Types of Debt (And How to Tackle Them)
It’s a misconception to assume that only those people who are foolish with their money are liable to fall into debt. We can all become susceptible to debt, no matter who we are or how wise we are with our finances, as you will know yourself if you can relate to the debt types we will briefly cover in this article.
By knowing how to handle debt, however, you will have the ability to avoid the pitfalls that so many people experience when they are weighed down with the financial burdens that debt can bring. So, check out the following, and heed the advice given if you can relate to the types of debt mentioned.
#1: Credit Card Debt
Credit cards can be useful, but if we rely on them for such things as expensive purchases, paying off other debts, and wasteful living, then we are going to find ourselves bogged down with high-interest charges and financial difficulties.
If you have one or more credit cards, you can avoid charges by paying the minimum expected payments each month. If you can pay off more than the minimum, you can also pay off your credit cards a lot sooner.
If you are struggling with credit card debt, you can use the advice here to negotiate better interest rates with your creditor. You can also consolidate your dates onto one low or zero-interest credit card or loan, as this is a good way to make paying off your debts easier and sooner.
You should also speak to a debt advisor, as they will explore your options for paying off your credit cards with with you, and will sometimes deal with creditors on your behalf.
#2: Debts Passed Down to Us by Others
When a loved one dies, we are often faced with the debts they left behind. We don’t always become responsible for paying off these debts unless we are signed on as guarantors for the debts in question. However, we still need to know how to manage the situation that we have been left with.
Your best course of action when dealing with these debts is to seek the assistance of a probate lawyer. They will advise you on what can be done to pay off the debts that have been left behind by the deceased, and will help you make important decisions, such as how to sell assets in probate to cover the debts that are outstanding. In some cases, the probate court may decide to use these assets to pay off the debts anyway, especially if there are more debts than assets.
You should also check to see if the deceased had insurance. Life insurance, for example, can be used to pay off a mortgage. It’s also wise to speak to the creditors involved. In rare cases, they might write off the debts that have been left behind. Alternatively, they might negotiate a fair payment plan if you are responsible for paying the debts back.
We hope this advice has been useful to you, but commit to further research on the debt types we discussed. By taking the right steps, you can avoid the headache that these debts can bring, and place no risk on your personal finances.