Keeping debt under control

On behalf of Bankruptcy Law Firm of Clare Casas on Wednesday, December 2, 2015.

Florida residents who are struggling with debt can take some steps to control it and to improve their credit scores. It is best to pay off credit cards in full each month, but for those who are unable to do this, some strategies for paying off debt are better than others.

For example, it might seem like a good idea to throw savings at a credit card debt, but if possible, it is better to pay down debt with regular cash flow. Otherwise, an emergency or other situation may arise that involves getting right back into debt because no savings are available.

When paying off debt, making all minimum payments on time is the most crucial step because a missed payment will show up on the credit report. If it is possible to pay more than the minimum, debtors should pay off the high-interest card first. As debt is paid down, people should consider whether they will benefit more from paying off low-interest debt or taking advantage of high-interest savings plans. Contributing to a 401(k) may be a better strategy than paying down a mortgage early. To keep credit healthy, avoiding overuse of credit cards, automating payments so that bills are paid on time and keeping an eye on credit reports are all important.

Sometimes, despite a person’s best efforts, it may not be possible to pay off credit card debt or other types of debt. Debt may mount quickly due to medical issues, unemployment, divorce or other life changes. If this has occurred, an individual may wish to consider bankruptcy. While this will affect a person’s credit rating, it is possible to begin rebuilding credit following a bankruptcy. Depending on what type of bankruptcy is filed, it may also be possible to keep a home and some other assets. An attorney can outline the eligibility and other requirements associated with a bankruptcy filing.