Posted under Bankruptcy Kitchener
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We have met with a number of people who have gotten caught in a circular manner of paying lines of credit and credit card debt. Let me explain. I recently met with Donna (not her real name) in our Kitchener office. For a number of years whenever she found herself short at the end of the month, Donna would simply take a cash advance from one credit card or line of credit and use those funds to make a payment on another debt. |
Jane Merling |
While this may have resolved the immediate problem of keeping the payments up to date and avoiding late charges or phone calls from creditors, it created a false sense of paying debt. In fact, if she had gone back and added up all the interest and cash advance charges she had paid she would have been shocked.
A few months before Donna came to see us she lost her job as a result of a downsizing in her place of employment. It only took a few short months for her credit to get maxed out and the house of cards that she had built began to fall apart. She was no longer able to use the circular manner of paying debt that she had relied on for so long because she had no more credit and could not increase her credit limits during a period of unemployment. She was actively looking for another job but in the meantime creditors were starting to call.
Donna filed a bankruptcy with us, putting an end to the collection calls and continuing interest charges. The bankruptcy process includes debt counseling, which she feels will be very helpful in making positive changes in the way she deals with her finances in the future.
If you are finding yourself close to the maximum limited on credit card/ credits line and that you sometimes have to rely on this method of payment, give us a call at 310-PLAN (310-7526, no area code required) or 519-747-0660 or e-mail us to arrange a free initial consultation.
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