The following is a guest post
If you’re in debt, then your first priority should be to get out of it. However, there are many different methods that you can use to work your way into the black. The methods that work for you will depend on your level of debt and the way you handle it.
There are two different ways to DIYing your way out of debt, the snowball and the avalanche. Both include making minimum payments on all your debts except the one you are targeting. The snowball method means that you pay off the smallest debt first and work your way up, and the avalanche method works by paying off the debt with the highest interest rate first. Once the first debt is paid off, you apply the payment to the next debt, and so on. If you don’t have to take on any more debt, then this method is perfect for you.
Consolidation means getting a loan to pay off all your debts. This means that you will then only have to pay one debt, albeit a big one. It will work if you don’t take out a loan that’s worth anymore than your debts, you can get a good interest rate, and you aim to pay off your debt in around three years. You can consolidate with a 0% balance transfer credit card, or a personal loan like the ones from 1st Stop. If you go with a credit card, however, don’t be tempted into running up new debt.
If you go to a credit counselling organisation, they will be able to help you organise a debt management plan to help you get out of debt faster. If you get a DMP, your creditors will reduce your interest rates, and you’ll pay the organisation, who will then pay each of your lenders.
If you’re dealing with significant debt that you really foresee trouble with, you could try and negotiate settlements. If you’re successful, your creditors agree to take less than the balance that you owe. If you are able to pay a significant about of your debt up front, perhaps a loan from a family member, then your creditors are more likely to lower your debt and make it easier for you to pay it off. #
Filing for bankruptcy effectively means eliminating most of your debt. However, it isn’t suitable for everyone, so you should talk to a qualified bankruptcy lawyer to see whether it is suitable.