As you might imagine, a debt consolidation lawyer like me who also offers Indiana bankruptcy help has seen both the good and the bad side of credit and loans.
Today, I thought I’d share with my Bankruptcy in Indiana readers my thoughts about four types of credit. #1, #2, and #3 can all have a place in your budget, and all three are probably tools you used responsibly before things began going wrong.
#1 Non-installment credit. This is the kind of credit available in some stores, especially the kind you visit frequently, and in country clubs. Several of the attorneys who work in the Zuckerberg bankruptcy law offices, for example, have lunch with clients or friends at their club, signing a receipt each time, then getting one bill at the end of the month for all their purchases during the past month.
#2 Installment credit. This is the sort of loan you’d used to buy, say, new furniture or new appliances. As both a consumer and as an Indiana attorney for bankruptcy, I've seen lots of people taking advantage of no-payments-for-six-months type offers. Then, if you pay the entire amount before the due date, there’s no interest charged.
#3 Revolving credit. Most credit cards use revolving credit. You’re given a limit, and you can use the credit to buy anything you like at any point in time up to that limit. You have to make periodic payments, and with each one of those, you’re replacing that credit.
#4 Payday loans. People who come to our offices needing payday loan debt help from an Indiana bankruptcy lawyer are usually in the worst kind of trouble. On the surface of things, payday lending sounds like a great idea – you borrow just enough cash to tide you over until your next paycheck. The way payday loans work is, you write a personal check payable to your lender for the amount they’re advancing you plus a fee. But the reason my colleagues the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers and I so strongly caution against payday loans is that the extensions tend to be absolutely disastrous for borrowers, with annualized rates on some payday loans going as high as 400%!
Don’t for a moment assume that, after 25 years helping tens of thousands of residents file personal bankruptcy in Indiana, that we oppose all borrowing. Exactly the opposite is the case. Credit and loans have an important place in your budget. In fact, one important aspect of emerging from individual bankruptcy in Indiana (and I mean either bankruptcy Chapter 7 or filing under Chapter 13 bankruptcy law in Indiana) is to re-establish credit.
No, it’s not #1, #2, or #3 type credit I’m worried about – it’s #4. You’ve tried your best to handle credit responsibly, but your financial pressures have been mounting. You think perhaps a payday loan might be a convenient way “hang in there until things turn around” – please don’t.
I offer help to stop foreclosure, student loan debt help, and help filing bankruptcy in Indiana. But when it comes to payday loan debt help I often say – Watch out for payday lenders. They’re the ones getting paid and you’re the one going into deeper trouble!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg