5 Ways To Pay Off Debt

Check out our list of ways to pay off debt to help you decide which approach is the best for you.

WAYS TO PAY OFF DEBT IF YOU'RE ABLE TO MAKE YOUR MINIMUM PAYMENTS

1.Snowball your debt payments
Snowballing your debt payments is done by making your payments as usual until one of your debts is paid off. As the first debt is paid off, you can take the money that would usually go to that debt payment and apply it to the next debt on your list. Once the second debt on your list is paid off, you can apply the payment amounts from your first and second debts to the third debt on your list. Keep going in this manner until all your debts are paid off. 

2. A Consolidation loan
A consolidation loan is one of the ways to pay off debt if you're still able to make payments and your credit rating is still in relatively good standing. A consolidation loan is a loan that is used to pay off all or a portion of your other debts. Then you only need to make 1 monthly payment on the consolidation loan which is often less than what you were paying before.

WAYS TO PAY OFF DEBT IF YOU'RE STRUGGLING TO MAKE YOUR PAYMENTS

3. Negotiate with your creditors
Negotiating with your creditors can help if you're struggling to make full payments, but could still afford to pay a smaller amount. You might be able to negotiate directly with your creditors to have the interest rate or the total amount of your debts reduced. If creditors don't negotiate with you, they know that they risk the possibility that you might go bankrupt and they end up getting nothing, so it's often in their best interest to work with you.

4. Credit counseling
Credit counseling is when a company will work with you and talk your creditors on your behalf to negotiate reductions in the total amount of debt you owe. This is one of the best ways to pay off debt if you are still able to afford to make some sort of payment, but are having trouble negotiating with creditors on your own. It's also a good alternative to bankruptcy and will do a lot less damage to your credit rating.

For an excellent credit counseling company, check out CareOneCredit.com. They will work closely with you to determine what solutions will work best for you and your situation.

5. Bankruptcy
Bankruptcy may be an option for you to consider if you are unable to make payments towards your debt. Bankruptcy could eliminate some or all of your debts but will have a serious negative impact on your credit score. This will make it very difficult to obtain any credit up to 7-10 years after you file for bankruptcy.

• In the US, you should discuss your options with a bankruptcy attorney – you can search for local bankruptcy attorneys here.
• In Canada you can discuss your options with a bankruptcy trustee. You can use this site to find one near you.
  
  

For more information on debt, please check out our more popular articles listed in the box below, or you can see our complete list of articles about debt.

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