It is not uncommon for Michigan residents to hear that some types of debt are good while others are bad. When struggling financially, is there really such a thing as good debt? Debt is debt, and if one cannot pay creditors what they are owed, isn't it all bad? This topic will be discussed a bit here, but those with specific questions regarding their own debt situations can turn to a local bankruptcy law attorney for guidance.
According to a recently published article, there are such things as good and bad debt. Good debt would be things like mortgages, auto loans and any other type of loan that is considered credit building. If paid according to the account terms, this type of debt can have a positive impact on one's credit score.
Bad debt, on the other hand, is anything that will lower one's credit score or cause one to lose a lot of money in interest in the long run. Examples of bad debt include payday loans, elective medical debt, excessive credit card debt and tax debt. So, rather than really helping one's situation, these types of debts just make it worse.
Most Michigan residents are not able to pay cash for everything, which is why different forms of credit exist. However, any type of debt, whether it is labeled good or bad, can cause significant harm to one's financial situation if one has more money going out than coming in. Those who find themselves in difficult economic positions can turn to a bankruptcy law attorney for information on the different debt relief options that may be open to them. With help, it is possible to put one's debt to rest and achieve a fresh financial start.