Paying Off High-interest Rate Card First

If you are contemplating of paying off your debt as soon as possible and you are on a tight budget, make sure to pay toward the debt that has higher interest rate. Apply the greater share of your monthly amount for this card rather than the cards that are less threatening to your financial health.

Managing Debt

Better yet, Throw Away The Credit Cards

Living without plastic is the best thing to do when you are facing debt that is not going to get resolved in a short period of time. So, cut up your cards or use them for emergency only. Instead, use cash for all the purchases you make after creating a budget plan. This way when the time approaches, you will have cash on hand to buy for those purchases.

Filing Bankruptcy

Bankruptcy which is a legal action and the last resort to solve your debt problems can come as a boon at the right time. If your debts exceed your assets and you have no way of paying off your debt, even after working with professional credit counseling services, you might want to seek this protection. Filing for bankruptcy can stop creditors from calling or hounding you for payment. This way you are free to restore order to your life and start from scratch.


Depending on the type of filing, you will pay off your creditors over time or become totally free from debt. However, there are many disadvantages in doing this. You are not only seriously damaging your credit rating, by impairing your ability to borrow money in the future. No creditors or institutions will be willing to take risk on you knowing that you have filed for bankruptcy before. The filing report will also stay on your record for 10 years.

If you are using bankruptcy as a last resort and worrying that you are left with nothing, know that you will not lose everything you own. In certain states, bankruptcy allows you to protect your primary residence, retirement plan benefits and education savings. And not all your debts are extinguished due to this filing. You will continue to owe debts such as alimony or child support, bills for luxury items, debts related to intentional actions, income taxes pertaining to federal and state, student loans, secured loans and other non dischargeable debts.