Chicago Bankruptcy Attorneys Say Paying Off Any Debt Is Better Than Doing Nothing
Some rules were made to be broken - and paying off your debt is no exception, say Chicago bankruptcy attorneys.
Common wisdom has always held that it's best to pay off the debt with the highest interest rate first - and for good reason. This way, you'll save the most money because you'll be avoiding the biggest future payments, and you'll keep your most expensive debt burden from growing.
But there's a downside to this strategy. As you know, the key to lowering debt is to pay more than the minimum balance, since small minimums like 2-4% might not cover much more than interest. And if you're only paying interest, the principal - the actual amount for the items you purchased - will stay the same, meaning you'll have to keep making those interest payments indefinitely. Problem is, people often get discouraged if they find it difficult to pay enough to cover a high interest rate plus some of their principal. And they use this as an excuse to quit.
If you can manage, you're going to save the most cash by tackling the debt with the highest rate. But the most important part of a debt payoff plan is action. You need to start making payments - and keep making them. If the old standby method isn't working for you, don't give up - just find an option that does.
Some folks fare better doing just the opposite: paying off the debt with the smallest interest rate first. With less interest, the same amount of money will go farther towards reducing the principal, resulting in a debt that gets paid off faster and easier. In theory, seeing a small victory so soon - and having extra cash in your pockets thanks to the eliminating the bills for at least one debt - will give you the motivation to start paying off your other obligations. It's worth a shot.
And then you have yet another option - bankruptcy. If you just can't find enough money to pay more than the minimum balance (or if doing so means you have to skimp on other payments, like the mortgage) you could use a personalized payment plan. Bankruptcy provides just such a plan, allowing you to lower or even eliminate some debt while paying an amount you can afford. As an added bonus, it can also protect your home from foreclosure. Find out if there's a bankruptcy plan right for you with a free personal debt analysis courtesy of our Chicago bankruptcy attorneys. Debt is different for everyone. Let us help find a plan that works for you.