When Escondido residents begin to realize that their financial situation is starting to become a major concern in their lives, most will attempt to find a solution to the problem. Financial difficulties can begin for a variety of different reasons, such as job loss, the sudden onset of a medical condition or the steady build-up of debt. In essence, financial challenges can occur suddenly, or they can build over time. When debt is the source of the problem, some Escondido residents will come down to two choices: debt consolidation versus bankruptcy.
For those who are unfamiliar with debt consolidation, it may seem illogical at first: borrow more money to pay off debt? The idea may seem strange, but the idea is that the new, larger loan is enough to pay off all other debts, and it comes with a much lower interest rate. Then, the borrower will pay off the "consolidated" debt over a period of a few years.
Debt consolidation may indeed be an option for some people, but that assumes that their credit remains healthy enough for a lender to consider such a large loan to a person who has already accumulated substantial debt. For some, the best option will be filing for bankruptcy.
For some people who are facing financial hardship, the real source of the problem is credit card debt. They may do their best to make the minimum payments for as long as they can, but eventually they realize that they are just "spinning their wheels." Filing for bankruptcy can be a legitimate option to address debt problems.
Source: nerdwallet.com, "Borrowing Your Way Out of Debt," Liz Weston, Oct. 11, 2016