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Debt
I have a lot of debt (long story) including some that are now on my credit report. I am near bankruptcy, although I am not seriously considering it at this time.
I was wondering, if I had extra money to pay off debts, which should come first?
Current credit card debts - because the average interest is about 20%
Student loans - although the interest is low (around 5%) this can never be included in bankruptcy.
Car loans - although the interest is lower than credit cards, your car can be reposessed and a car is essential if you want to be employed.
Bad debts on the credit report - they have given up trying to get me to pay. If I pay these, my credit rating will improve, but at this point there is probably not much advantage.
Save money instead of paying debets - I can see saving for an emergency, but I think there is not much point in this situation.
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Want to answer more questions in the Work & School category?
Maybe give some free advice about: Personal Finance?
First, cut up all your credit cards. As Will Rogers once said, the first thing to do when you find yourself in a hole is to stop digging.
Talk to a bank about a debt consolidation loan for the credit cards. It will cut down the interest rate. Set up an affordable payment plan that lets you cover the car loans, the student loans, and the debt consolidation loan on your current income while still meeting your regular expenses such as rent and food. Set aside a couple hundred dollars for emergencies. Then use whatever money you have left over to attack the car loan.
Bankruptcy is not a "get out of jail free" card. The damage to your credit report will follow you for seven years, and certain kinds of jobs (such as those requiring a government security clearance) require a credit check before you are hired.
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I would pay of the car, then the credit cards, then the 'bad loans' then the student loan in that order. Then save as much as you can.
Also, you could put maybe a couple of $[or £]s away each month into an ISA or similar hight interest savings account, as it can soon mount up.
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As always, feel free to contact me if you need to talk.
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If you have the extra money and the opportunity to pay some things off, the CREDIT CARDS should come first. This way, you STILL have your credit and therefore, you won't NEED cash in case of EMERGENCY.
Next, you should pay off the debts that are on your credit report. Once you pay them off your credit will improve greatly, which will enable you to BORROW more money at a lower interest rate to handle paying off your other debts if need be.
Sincerely,
Samantha
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you can put ur credit card debt on a different card with a lower interst it will save you money and depends on how long you have to pay off ur student loan to c if you wanna pay for that
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your best bet is to talk to a financial advisor, your bank will usually have one of these you can talk to, they will not onlyprioritise your debts but also help you set up stratagys in which to get them paid and help you to not get in the same situation again.
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car loans orbad debts on credit reports
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Actually get rid of your credit card debt because those are hard to get rid of, but what most people like to do is simply divide the money you are going to spend on getting rid of debt and split it on to getting ride of two debts, its faster.
Cspinoza1
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