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How debt can get out of control

| Sep 19, 2016 | Bankruptcy |

Kentucky residents who are drowning in unpaid debts may find that it is very difficult to save money for the future. Debt problems may be one of the major reasons why most of Americans have less than $1,000 set aside in a savings account. When the interest on debts starts to add up, a person may find that it’s time to seek some financial advice.

Though making the minimum monthly payments on a debt can prevent interest from accumulating, it won’t do very much to lower the principal balance. People who can only afford to make minimum payments on their debts while they are living paycheck to paycheck are in a financial crisis that could easily get worse. If there is an unexpected expense like a medical bill or a car repair, credit card payments could be missed.

Credit card companies will penalize a debtor for late or missed payments by imposing penalty fees and increasing the APR. As their unpaid balances begin to accumulate late fees with higher interest, their chances of paying off their balance starts to go down. If several credit card payments are missed, their debt could go into collections.

Collections attempts by creditors often create a situation where a person who was already struggling financially now has the added stress of receiving intimidating phone calls and letters. These kinds of actions can be stopped if a debtor chooses to file for bankruptcy. Once a client’s eligibility has been determined, an attorney can assist in preparing the required petition and other forms and submitted them to the court.