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Which Debt Should I Pay Off First? | Missouri Bankruptcy Lawyer

When you are in a debt situation where you are being pulled in a dozen different directions, how do you even know how to start paying it off? In many cases, individuals and families find themselves struggling with mortgage or rent payments, credit card payments, car payments, student loans, and other expenses. It can be very difficult to even know where to start.

In general, the best way to start is to tackle the debt with the highest interest rate. While home loans and students loans usually have lower rates, credit cards can have astronomical rates – sometimes as high as 25 percent. While continuing to make minimum monthly payments on all of your debts, try to pay extra on your one debt with the highest interest rate. When that debt is gone, move on to your next debt with the second highest interest rate. While doing this, be sure to avoid accruing more debt!

Though it is important to your credit score and your quality of life to rid yourself of “bad” debt like credit card debt, it is not necessarily bad to keep other types of debt, such as student loan payments and house payments. Pay these monthly bills consistently, but don’t worry about paying them off quickly unless you have all other aspects of your financial life under control.

If you are unable to make the minimum payments on all of your debts each month – or if you cannot foresee paying off your debts in a reasonable number of years, researching the possibility of filing for bankruptcy may be a good idea. Only you can know for sure if bankruptcy is the right option for you, but talking to bankruptcy lawyer or reading more about bankruptcy could help you come to a decision that works best for your situation.

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