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14 May 2012

Colorado Springs Debt Relief: Is Debt Ever Good?

Colorado Springs debt relief attorneys know that when you're underwater in debt - mortgage, credit cards, medical bills and student loans - someone telling you that there actually is such a things as "good debt" would probably be given a murderous look. 

However, when trying to set up a plan for Colorado Springs debt relief, it's important to note that there actually ARE situations in which debt is a positive thing.

Now, before you go racking up a ton of credit card purchases, you need to know that there is good debt - and there is very bad debt - and then there is REALLY bad debt.

First, let's look at the really bad. This is usually the kind of debt that piles up when you are spending more than you are bringing in. Our Colorado Springs bankruptcy attorneys know that in a lot of situations, that is simply beyond your control. For example, you were badly injured in a car accident or you lost your job or had to take a serious cut in pay. You may find yourself not even able to keep up with the minimum payments. In those situations, a Colorado Springs bankruptcy may be your best option.

Secondly, the bad debt is the kind of debt that stacks up because you are living outside of your means. Likely, you are purchasing luxury items that you really can't afford (vacations, a kitchen remodel). That means you are only able to make the minimum payment. The problem with this is that it ends up costing you way more in the long run, and if you hit one unexpected snag in the road (job loss, injury), you are in serious trouble.

Thirdly, the good debt. This is the kind of debt that is going to aid you in achieving a positive result in a set time frame. It's going to help you slowly increase your assets and your net worth. This is what financial advisers are going to tell you to go ahead and take on. One type of this is a mortgage (of course, assuming that it's actually worth what you're buying it for and that it has a favorable interest rate of 5 percent or lower). These are debts that are going to mean monthly payments that you will easily be able to afford. Other examples include car loans and school loans - assuming it's not a luxury sports car that you can't pay for or an education that is not going to mean much in the current economy.

But generally speaking, good debt can improve your credit score and your overall financial stability.

Stephen H. Swift

Managing Attorney
Law Office of Stephen H. Swift, P.C.

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