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Bankruptcy could be the answer when debt ruins credit

Rarely does a New Jersey consumer get into debt overnight. Unless a catastrophic event such as a car accident occurs, an overwhelming amount of debt tends to creep up on people. For people whose debt has gotten out of control, bankruptcy could be a solution.

By the time many people realize just how dismal their financial situation is, credit cards are often maxed out and the budget is stretched to its limits. At this point, consumers begin to scramble to regain control of their finances. For some, making budgetary sacrifices and paying as much money on the bills as possible will work.

Of course, many things in life depend on a person's credit report and credit score. The ability to purchase items such as a home or a new vehicle could be compromised. A bad credit report and score could also jeopardize a new job or an apartment lease. None of this has stopped Americans from having an average of $225,000 in debt -- of which an average of $15,000 is credit card debt. The average income, however, is only $53,000.

It can be easy to get in trouble with debt when it is viewed as normal in our society. When debt becomes too much to handle, it may be a good idea to file for bankruptcy. Once it is filed, New Jersey consumers have the opportunity to step back and evaluate their financial situation objectively. After most, if not all, of filers' debts are discharged, they can formulate a plan to move forward with a clean financial slate.

Source: ABC News, Debt: The 4-Letter Word That Can Ruin Your Credit, Adam Levin, March 2, 2014

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