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The True Costs Associated With Debt

On Behalf of | Mar 20, 2014 | Bankruptcy Basics

America is often heralded as a land of opportunity where those who work hard can have it all. While U.S. residents are certainly afforded many privileges and freedoms not enjoyed by citizens of other countries, the false notion that one can have it all leads many to make choices that ultimately result in a life spent struggling to get out of debt.

2013 statistics show that debt amongst American households is creeping towards levels experienced prior to the 2008 economic downturn. Today, the average U.S. household carries around $197,000 in mortgage, student loan and credit card debt. For many Americans, the thought of attempting to pay off large amounts of debt is incredibly overwhelming.

As a result, some Americans continue to spend freely driven by the belief that incomes, along with the ability to pay off debt, will increase in the coming years. In reality, however, those who fail to reduce spending and take real steps to pay off debts may become trapped in a vicious cycle of making minimum payments while continuing to accrue new debt.

While it’s easy to get into debt, it can be extremely difficult to get out of debt. To illustrate this point a 37-year-old wife and mother of two has been chronicling her family’s difficult journey to become debt free. Upon realizing her family was $127,000 in debt, the woman and her husband were forced to make difficult decisions and drastically reduce spending. From giving up a telephone landline to no longer buying clothing and making their own laundry detergent; the family continues to sacrifice in an attempt to climb out of debt.

Even in cases where individuals and families cut spending and devise a strategic plan to become debt free, most are still a job loss or medical emergency away from spiraling back into the grips of debt. Living this way is difficult and can lead a couple to divorce or an individual to become depressed and anxious. For those who feel hopeless and overwhelmed, it may be time to seek the advice of a bankruptcy attorney.

Both Chapter 13 and Chapter 7 bankruptcy allow an individual to eliminate debt and regain a sense of control and hope. Debt impacts millions of Americans and, for some, can quickly get out of control and adversely impact one’s psyche and ability to maintain import relationships.

Source: NBC News, “The Long, Grueling Road: Getting Out of Debt,” Linda Federico-O’Murchu, March 14, 2014