Strategies for getting out of debt

On Behalf of | Mar 7, 2020 | Bankruptcy |

Tennessee residents may feel as if their debt payments are a burden that they will never be rid of. However, there may be strategies that a person can use to pay off creditors in a timely manner. For instance, an individual could choose to use the debt snowball method to pay down his or her existing balances. Those who choose to use that strategy will put any disposable income that they have toward their smallest balances.

When the first balance is paid off, a debtor puts that money toward paying off the highest remaining amount owed. While it can be more expensive to use this strategy, it can be an ideal choice for those who need extra motivation. Debtors who are more concerned with paying as little interest as possible may prefer using the debt avalanche method instead. Individuals who choose this method will put extra money toward the balance with the highest interest rate.

Debt consolidation could be an effective way for a person to get control of his or her finances. Debts are typically consolidated with a personal loan or by transferring existing credit card balances onto a new card. Individuals who have good credit might pay less interest by using one of these tactics. It can also be easier to manage one account instead of several, which could reduce the odds of missing a payment.

Filing for bankruptcy might allow a person to have unsecured debts discharged in a matter of weeks or months. It may also result in an automatic stay of creditor collection activities. This means that a creditor cannot file a lawsuit, repossess an asset or contact a debtor directly. An attorney may be able to explain the process of filing for bankruptcy and other potential benefits of doing so.


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