Depending on the type of debt being carried by an individual, business or family, different tactics may be required to handle it. For example, a mortgage on a home here in Kentucky carries a considerably lower interest rate than debt accrued on a credit card -- hence why some financial experts refer to "good" and "bad" forms of debt. To handle "bad" debt, sometimes it is helpful to take on other forms of "good" debt; for example, a personal loan. This is the fastest-growing debt type in America, and can help families pay back high-interest debt before considering Chapter 7 bankruptcy as the next option.
Once upon a time, a personal loan carried with it considerable stigma -- a so-called "last resort" for those carrying massive credit or other high-interest debt. More recently, however, many Americans have used personal loans to consolidate multiple high-interest credit card debt into a loan with a lower, more manageable interest rate. Unfortunately, some people can find themselves in trouble if they take out a personal loan without mitigating their use of credit cards.
This is why financial literacy is so important in the debt reduction process. Taking out one loan to pay down another only works if the individual does not add more weight to existing debt. This can mean coming up with a comprehensive budget or plan to pay back the lower-interest debt over time, without making the situation worse. Ultimately, the goal is to pay down debt as quickly as possible to minimize interest charges.
Of course, for some Kentucky residents, a personal loan simply isn't in the cards. For individuals facing damaging debt, Chapter 7 bankruptcy is a viable option to discharge unsecured debts such as credit cards. With the help of a dedicated attorney, bankruptcy can also clear the road to financial freedom.