Bankruptcy Alternatives
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Not knowing the difference between Good Debt and Bad Debt can lead to Bankruptcy


Some people believe that all debt is bad; they believe you should never borrow money, because that way you are never indebted to anyone. Others believe that all debt is good; you are using other people’s money to invest, buy a house, or get the things you want now.

The truth is that some debt may be good, and other debt may be bad, and not knowing the difference can lead to personal bankruptcy.

In general, good debt is debt you get to purchase something that will go up in value. For example, buying a house may be good debt, because over the long term most houses increase in value. However, it is only good debt if you can afford to pay it back. If you borrow more than you can afford to make payments on each month, it is definetly bad debt.

A debt consolidation loan may be good debt, if you are borrowing at a low rate to repay higher interest rate debt. Obviously that type of debt is a good bankruptcy alternative.

However, even a credit card debt consolidation loan may be a bad idea if you cannot afford to make the payments.

Bad debt is usually debt you take on to buy items that will not go up in value. Borrowing money to take a vacation is almost never a good idea; it’s bad debt because once the vacation is over, you have nothing tangible to show for it.

If you constantly borrow money for items that decrease in value, your debt may increase to the point where personal bankruptcy becomes your only option, so consider your bankruptcy alternatives wisely, and only borrow if it’s good debt.

Posted by Editor Bankruptcy Alternatives @ 3:28 pm

Why Debt Consolidation may not be the best Bankruptcy Alternative


For many, debt consolidation is an excellent bankruptcy alternative. The advantage of debt consolidation loan is that you consolidate high interest rate debts, like credit cards, into a lower interest rate loan.

However, before getting a debt consolidation loan, be sure that a debt consolidation loan will solve your problem, and not merely cover up the problem.

Many people have debt problems and are considering bankruptcy because they spend more than they earn. While a debt consolidation loan may reduce your monthly debt payments, it will not solve the underlying problem of excessive spending.

Our advice is simple: before considering a debt consolidation loan as a bankruptcy alternative, make a personal budget and cut your expenses. Cutting expenses gets you back on track financially, and may be the best bankruptcy alternative.

Posted by Editor Bankruptcy Alternatives @ 12:47 am is a free resource
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