If you are in debt, you probably prefer to pay it off rather than file for bankruptcy. This is because paying back your debts can help you get back on track with your financial goals.
Here are some tips to help you pay off your debts.
Pay more money than your monthly payment
Although you only legally have to pay the minimum amount each month before the debt collectors knock on your door, investing more than your monthly payment is a great way to get out of debt. These extra funds will help you pay your debt off faster. A lot of lenders let you pay extra each month. However, check your terms and conditions to ensure you do not face prepayment penalties.
Pay twice a month
When you have credit card debt, paying your bill more than once a month is wise. That can help you stay on top of your total amount owed. It will also lower your credit utilization ratio. This ratio is how much of your credit limit you are using. This is a critical factor used to calculate credit scores.
Pay your most expensive loans first
The most costly loan has the highest amount in interest and the highest rate. So, paying this one off first allows you to reduce the amount of money you are paying in interest, which decreases your debt. Then, once you have paid off that loan, you can move on to your next most expensive one.
If eliminating your debt seems impossible with these methods, it might be time to consider Chapter 13 bankruptcy. That can help you restructure your total amount owed to pay it off promptly and get your credit score back on track.