Minimum Payments Cause Maximum Debt for Chicago Consumers
It's the ultimate reality check: thanks to the Credit Card Accountability Responsibility and Disclosure Act - or Credit CARD Act -we're forced to confront our debt problem every time we open our credit card statement. New rules require creditors to illustrate how long paying off our debt will take if we send only the minimum payment in each month.
If you have indeed been relying on minimum payments, seeing those numbers can be a real shock - sometimes enough to send you into denial. After all, when you realize your current credit habits will keep you in debt for decades - in some cases, forever - you might feel like, what's the point in trying? But you've got to remember that what your statement is showing you isn't necessarily a glimpse into your future. Instead, it's a reminder that you can change your future - and your debt.
Minimum payments are a tricky business. They give you the illusion of control because you're paying the smallest amount possible each month, freeing up more money for other bills and necessities. But what's easier today will be infinitely more difficult tomorrow. If your minimum is only covering interest and not paying off your principal, your debt will grow larger and larger until you can't even afford the bare minimum. But it doesn't have to be that way. Look at this as your wake-up call.
It's possible to lower debt on your own with the right budget, several large payments and a lot of persistence. But if you're consistently overwhelmed, you might stand a better chance getting things under control by seeking help. Bankruptcy can be the best course of action for large debts because it allows you to pay off your burden in affordable amounts over a realistic timeline.
By paying more than the minimum - and in some cases, discharging debt - you'll be on the fast track to financial freedom. Find out if there's a bankruptcy plan perfect for you when you try a complimentary personal debt analysis with one of our Chicago bankruptcy attorneys.