We make decisions and decisions make us. Most of the problems that we face in life are caused by unsound decisions. These include financial problems.
When you are loaded with debts, your first option is debt consolidation to reduce monthly payment and to improve your cash flow. Should financial institutions turn down your application for debt consolidation because of your inability to meet the credit requirements, you may juggle your credit cards by using one card to pay the other. Some time you use your credit cards to pay off other debts that you are under pressure to pay.
Juggling your credit cards, and using them to pay your other debts are clear signals that you are in financial trouble. To use your credit cards to pay your other debts do not help you at all in solving your financial difficulty. You are just simply prolonging your financial distress, because of the following: first, credit card interest is too high; second, your payments do not reduce your indebtedness; third, your debts would continue to increase due to interest charges; and finally, when you decide to file for Consumer Proposal or Bankruptcy (which would have been an earlier option) Credit Card Companies may oppose on the ground of misused of your credit cards.
A good illustration was a couple whose house was taken over by a bank through Power of Sale resulting from arrears in mortgage payments. When the house was finally sold, the proceeds of sale was not enough to cover for the balance of the mortgage after legal and other related expenses. The shortfall was about $15,000.00. They were sued for it, under pressure the couple decided to use their credit cards to pay off the shortfall. Although the case against them was dismissed, however, in less than sixty days credit card companies were hounding them for they defaulted their payments.
The couple decided to file for bankruptcy but their bankruptcy was opposed by Credit Card Companies for misusing their credit cards. As a consequence, a bankruptcy court may require them to pay back a portion or all of the $15,000.00 they used to pay off he shortfall.
Had they decided to file Bankruptcy or Proposal earlier, instead of using their credit cards to pay off the shortfall, their bankruptcy should have been no hassle.
Before making any decisions including financial matters as in the above case scenario, it is prudent to gather reliable information and facts that could help make wise decisions to live a much easier life. Remember, you make decisions and decisions make you.
Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.