2 things you might want to avoid when addressing debts

On Behalf of | Sep 7, 2022 | Bankruptcy

Many who owe creditors thousands of dollars try multiple methods to pay off such debt. However, many supposed techniques for debt relief simply do not work. They could even make your circumstances worse.

If you are determined to explore every possibility before investigating bankruptcy as a solution, it’s advisable to use caution. The two so-called remedies below could worsen your financial situation.

Taking payday loans/cash advances

Payday loans can give you instant access to cash, allowing you to pay late credit card bills or other debts, but it sets you up for failure. First, you are merely piling more debt on top of your existing problem because payday loans impose expensive interest rates. Second, the instant gratification these loans provide can allow you to put off your hunt for a real solution.

Using your home equity

It sounds great on paper. Get a loan on the equity, pay off your credit cards and enjoy the low-interest rates a home equity loan offers. However, it does not address the reason you fell into debt in the first place. If you find yourself right back at square one, you will have put your home at risk.

Bankruptcy as an alternative

Bankruptcy—chapters 7 and 13—has lost much of its negative stigma in recent years. More and more people now accept bankruptcy as a valid and effective debt relief solution. Even better, you may be able to protect your home (and some of its equity) when you file as a Tennessee resident.

If you have delayed learning more about chapter 7 and 13 bankruptcy, it is time to increase your knowledge and find a debt remedy that works without further financial harm arising.