608 Mabry Hood Road, Suite 202 | Knoxville, Tennessee 37932
Does forbearance actually lead to more credit card debt?
There are many reasons why Tennessee consumers are not able to make timely credit card payments, and it is often because of reasons beyond their control. Whether it is because of job loss, sickness or other reasons, credit card debt can quickly accumulate when there is a reduction in income or unexpected expenses. This may leave some consumers in a place where they want to explore the possibility of forbearance.
Forbearance programs allow consumers to get relief from credit card payments. They may be able to delay payments, avoid late penalties or benefit from a lower interest rate for a limited period of time. The relief from these programs is short-term, and while they may seem beneficial for the immediate future, they may not really pay off long-term. Before entering a forbearance program, it is prudent to consider the potential consequences.
Taking advantage of this type of program does not mean a Tennessee consumer will not have to pay interest on unpaid balances. In fact, interest can continue to accrue on an overall balance even if payments are paused or the current interest rate is lower. When it is over, a card holder may still be facing an total unpaid balance that is not manageable.
When considering forbearance, it is beneficial to consider other options as well. In some circumstances, it is actually better to file for bankruptcy, as this allows a consumer to discharge certain types of balances, including credit card debt. An assessment of the individual situation will reveal if this is the most practical way forward.
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608 Mabry Hood Road, Suite 202
Knoxville, Tennessee 37932
William E. Maddox, Jr. LLC, Attorney at Law is located in Knoxville, TN and serves clients in and around Knoxville, Oak Ridge, Louisville and Anderson County.
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