Although the economy appears to be steadily improving, the stark reality is that many Americans continue to struggle with personal debt. As a result, many are living paycheck-to-paycheck, and any unexpected expense can quickly derail their already tight budget. One option individuals often turn to for assistance in combating these unexpected expenses is payday loans, which can quickly turn into a debt spiral.
Sadly, military families appear to be turning to payday loans with more frequency than ever before. In fact, a recent study found that the number of military families turning to these loans has doubled over the last five years. This is problematic because the sometimes triple-digit interest rates can quickly balloon the amount to be repaid. This may not be too big of a deal if an individual truly just needs to bridge a gap until the next pay period at which time he or she will repay the loan. But the truth is that many keep turning to these loans and are unable to repay them in a quick fashion.
To avoid becoming ensnared in the payday loan debt trap, military and other families need to consider other debt relief options. Military families may be able to work with relief organizations, and assistance from family and friends may be another option. Even a personal loan from a credit union is probably a better option than a payday loan.
Those who find themselves simply spinning their wheels in their efforts to repay debts may need to take stronger action, though. This can include filing for personal bankruptcy. Chapter 7 bankruptcy, also referred to as a liquidation bankruptcy, may allow a family to eliminate most, if not all, of its debt. This process isn’t for everyone, however, which is why those struggling with overwhelming debt should discuss the matter with a legal professional who can help them determine if they qualify for Chapter 7 bankruptcy and, if so, how best to proceed on a claim.