Establishing Priorities When You Pay Down Debt

If you plan to pay down debt, you need to establish priorities to make sure you are doing so in the most sensible way. If you have excessive debts, there may be debt solutions available to you that can drastically reduce the overall amount of debt you end up paying. Discuss your debt concerns with an experienced professional such as a bankruptcy attorney or CPA to make sure you understand your options.

Debt Pay Down Priorities

To figure out the best priorities for paying down debts, you will need to look at the loan and contract terms for each of your debts. It may be helpful to enlist the assistance of someone who is good at financial matters when you sit down to look at the numbers. Some of the important things which you must look at for each of your debts include:

• Interest rates. Typically, the higher the interest rate, the more important to pay the debt off quickly. High interest rate debts can cause your debt to rise if you are not careful.
• Check contract terms to see if there are penalties for early payoff on any of your accounts. You do not want to incur penalties for paying any of your debts early.
• Inquire about consolidating some of your debts if it would lower your interest rate on some or several debts or lower your monthly payments or both.
• When you compare your interest rates on similar credit, you may find that creditors will be willing to negotiate lower interest rates when asked. This will depend on your account status, and the creditor's policies.

To get out of debt, you need a plan. Your plan should include a budget. A budget is a spending plan to help guide you. It does not have to be severe or extreme. It is just meant to help you assess where your money goes and look at places where you can make changes.

Getting Legal Advice

An attorney who handles debt cases can help you figure out your best options based on your assets, income and other factors. Because attorneys deal with debt professionally, they can also help you gain a different perspective about your personal situation. When you talk with an attorney about your financial affairs, you can trust that the conversation will be held in strict confidence.