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One prevalent reason for applying for bankruptcy debt relief in San Diego is the accrual of massive amounts of consumer debt, which few people have knowledge about.
The most noteworthy sign of a healthy and functioning economy is when people are spending their hard-earned cash on goods and services, letting the money become “liquid,” as they say, and allowing it to circulate through the system.
Yet, while ample spending means there is significant interaction between the market and the consumers, that is when speaking broadly. For specific individuals, though, spending heavily, especially when done beyond one’s means, can be a very dangerous dance.
Why Shouldn’t You Spend More?
While groups spending money is a good thing, it can be fractally more damaging the smaller you go. When an individual accrues a lot of personal debt due to either purchasing too many goods or for individual or household consumption, that debt becomes what is known as “consumer debt.” This typically happens because one cannot adequately pay for the goods and services they wish to take advantage of. Financial mismanagement is frowned upon, you should know.
Basically, consumer debt is debt one acquires through the actions of being a consumer, most especially, a very bad one, who does not think of the long-term consequences of their purchases, who buy without looking for cheaper alternatives, etc. Of course, not all consumer debt is because one is a bad consumer. Some consumer debt is attained because of untimely emergencies and necessary payments.
Examples of consumer debt include student loans, credit card debt, mortgages, payday loans, auto loans, and a whole lot more. In comparison, most debt is from mismanaged investments.
One prevalent reason for applying for bankruptcy debt relief in San Diego is the accrual of massive amounts of consumer debt.
What Is with Consumer Debt?
A good reason why consumer debt is common is that it can easily be extended by a bank, a credit union, or the federal government. There are two categories of this: revolving debt and non-revolving debt.
Revolving debt is a debt paid for every month. This includes credit cards and home equity lines.
Non-revolving debt is a lump-sum loan with fixed payments over an agreed-upon duration. This includes school loans and mortgages.
Pros and Cons of Consumer Debt
While consumer debt has the caveat of being possible to extend, it is still considered a flawed way of acquiring adequate finances for one’s personal needs simply because interest rates for this kind of debt, like in credit cards or payday loans, are incredibly high compared to other loan-type deals like mortgages. Furthermore, most people typically ask for consumer loans to buy items that aren’t necessary or will naturally increase in value over time, which would have been a better case for acquiring the debt.
Of course, opposite this, there are some groups that say that consumer debt, despite its effects on specific individuals, is a good thing because it does a great job of promoting consumer spending and production, which are essential to maintaining a healthy and growing economy and a consistent cycle of supply and demand. This is best shown when young people off to college take on loans to both pay for their education and housing costs. Inevitably, when these people grow into adults and graduate, the debt they have accrued will be easier remedied because of their improved incomes. Basically, money now becomes money later within the context of the economy. This cycle, when properly regulated and tended, becomes a critical aspect of the economy and is a clear indicator that things are going on a positive and upward trajectory; of course, this assumes that the accumulated debt will be paid for eventually without harm to both the loanee and lender.
What Happens When Consumers Go Bankrupt?
While most loans are expected to be paid eventually, there are definite times wherein individuals find it difficult to do so or are rendered incapable of paying off their debts. When the latter happens, the only option they may have is to declare bankruptcy, which is the legal process under federal law that helps the debtor of some or all of their debts. Although by no means perfect, it is considered the best option if conditions really are not up to the task of paying off debts; also, it can be a relatively straightforward way of giving people a fresh start with their finances.
If you or someone you know is struggling with finances and are considering declaring bankruptcy, the help of a good lawyer could make all the difference.
Don’t be overwhelmed by the so-called “horrors” of bankruptcy and reach out to The Bankruptcy Professionals at the Law Offices of Ronald E. Stadtmueller.
With the right guidance and the proper advice, anyone can navigate the challenges and tribulations of financial mismanagement and come out on the other side with a better outlook on life.
Don’t hesitate to take direct action and seek out all the help you need!