Taking on a significant amount of debt can lead to financial distress for many New York consumers. If you find yourself dealing with debt, you may be wondering how you can ever manage it on your own or how you can regain your financial stability. It may help to learn more about different types of debt and what they can mean for your financial well-being.
Certain types of debt are not necessarily negative debts. While having more debt than you can manage is never a good idea, some balances can help you accomplish certain things. Most people have debt, but whether yours is good or bad depends on the details of your individual situation and whether you can afford payments.
When does a debt become "bad"?
Debt in itself is not inherently bad. What makes a debt a "bad debt" is when the consumer responsible for it does not have the financial resources to make payments or pay it off completely. This is why it is critical for a person to think carefully before taking on a substantial amount of debt. Financial circumstances can change without notice, such as in the form of a job loss, and what was once manageable is no longer so. This is a situation when debt can quickly become bad debt.
Debt is also bad when a person takes it on from a place of desperation. For example, medical debt as the result of an emergency room visit can be bad debt if the person does not have the money to pay what he or she owes the hospital. Debt can also be bad in situations when a person takes on too much at once or uses a credit card to pay for an expensive emergency situation.
What does your debt mean for you?
The way your debt will impact your financial situation depends on factors such as the amount you owe, your income, your spending habits and more. No two situations are the same, but if you find yourself unable to keep up with your payments and struggling to make ends meet, it may be time to look at potential solutions.
By filing for bankruptcy, a consumer can reach a better financial future and deal with certain types of debt once and for all. This is not the best step in every situation, but it may be the smartest choice for you. An assessment of your case can help you understand if this is the right way forward for your situation.