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Personal loans and a growing debt problem in the United States

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Personal loans and a growing debt problem in the United States

Like many others in the United States, you may be facing a debt problem. Most people have credit cards, and many people also have debt obligations that include medical bills, student loans, car loans and more. These can all add up quickly, ultimately resulting a debt burden that a Kentucky consumer cannot effectively manage on his or her own.

If you are struggling with debt, you are not alone. Credit cards, unexpected medical bills and higher education loans are all common reasons people find themselves in financial trouble, but personal loans is one of the fastest growing categories of debt across the country. Year to year, this category of debt is growing at an approximate 11% rate.

What’s different about a personal loan?

A personal loan is a loan that someone can get for various things, such as home improvements, business startup costs and more. Some people use them to consolidate their credit card balances. For many, these loans can make sense, but they also come with certain risks that can catch a person off guard. Consider the following things you may not know about these types of loans:

  • Interest rates for personal loans can vary dramatically. In some cases, rates can be as low as 5% or 6%, but they could also be as high as 30% or more. It can be surprising how quickly interest can accumulate after even just one or two missed payments.
  • These types of loans may have shorter payback windows, often just over a period of three to five years. This will mean payments will be higher per month, which can be difficult for some consumers to sustain.
  • Some personal loans come with steep origination fees, which can result in a higher balance a borrower will have to pay back.

Like other types of loans, personal loan balances can become burdensome when income changes or new financial obligations arise.

The solution to your debt problem

Your debt is not something that will go away on its own or over time. You don’t have to wait until you have more money or a better paying job to take control over your finances once again. With personal loans and other types of debt, consumer bankruptcy may be the answer. This process allows consumers to discharge some balances or follow a repayment plan, all while enjoying a reprieve from creditors taking action and debt collectors calling.

If you think that you may need help finding a solution to your debt problem, you may want to start with by reaching out for experienced legal guidance. A simple assessment of your case can help you see if bankruptcy is the right way forward for your situation.