For Coloradans who are struggling financially, it may come as no surprise that our state was recently ranked fourth in the nation for consumer debt. We can all hope that situation changes soon, but it's not difficult to understand how people find themselves pinned in by mortgage payments and using credit cards to cover basic expenses. Some people even work two jobs and have to use a credit card to put food on the table.
Maybe a family took out a mortgage loan with the best intentions of making payments. But then the job situation changes or a medical emergency happens and medical bills pile up. These things drastically affect people's finances, and using the credit card seems like the easiest way of staying afloat.
If monthly payments are impossible to make, then any financial advisor would say to stop making charges. But many of us know that life isn't always so simple, and sometimes alternative methods such as personal bankruptcy are necessary to achieve debt relief.
However, there are some strategies that credit card users should try first. If you have to use a credit card, then it's better to spread the charges over numerous cards rather than piling charges onto one. It is also wise to pay off the cards with the heftiest interest rates first.
If you are successful in paying off a credit card, then it's advisable not to cancel it. Instead, you can refrain from using the card or even cut it up, but it's not necessarily a good idea to close the account.
Denver residents who are looking for ways to get out from under heavy debt should also be aware of their legal options. Credit card companies are notorious for shady collection practices, but consumers have a right to stop creditor harassment, just as they have the option of pursuing a financial fresh start through personal bankruptcy.
Source: KKCO 11 News, "Colorado ranks No. 4 in personal debt," Sept. 11, 2012