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Debt and bankruptcy - what should an Escondido resident consider?

Most people have several different types of debt impacting their credit at any given time. From mortgages to credit card debt to student loan debt, not every debt a person owes can be approached in the same way. For instance, as many of our Escondido readers probably know by now, student loan debt can almost never be discharged in a bankruptcy proceeding, even a Chapter 7 "liquidation" bankruptcy filing. Although some federal legislators are attempting to change this situation, the current law prohibits this type of debt discharge. So, besides attempts to change the monthly amount paid or the amount of time it takes to pay off the loans, student loan debt is fairly intractable.

However, most people have more options with other types of debts, including car loans and credit card debt. A recent article sought to inform readers about many of the potential strategies, and the first step suggested was to take a comprehensive look at precisely what is owed and to whom.

Another suggestion, which has been mentioned in previous posts, is to make a household budget and stick to it. The initial analysis that setting up a budget will involve can help an individual or family diagnose where money is coming in and what it is being spent on. From there, having this information on paper can help a person determine where cuts can be made or extra income earned.

For mortgages, credit card debt and auto loans, one strategy may not occur to most people - talk to the lender. If someone is having trouble with payments because of temporary unemployment or an unexpectedly large surprise expense, some lenders may be willing to make a change to the debt agreement if it helps to ensure that the payments will eventually be resumed on the normal schedule.

Source: Minyanville, "Deep in Debt? What to Do and Where to Get Help," July 18, 2013