Three Smart Strategies For Debt

Before you consider bankruptcy or just start throwing money at mounting debts, one of these three debt strategies might just work for you. In the Chicago area, it’s best to discuss your alternatives first with an experienced Chicago bankruptcy lawyer who’s helped others in similar situations. The three strategies are:

1. The bottom-up strategy. The bottom-up strategy has the longterm effect of accelerating your debt payments as you go. Start by paying the minimum balance on all of your debts except your smallest one, and pay everything you can on that smallest debt to pay it off quickly. That will give you more cash to begin on the next-smallest debt. For every debt you pay, you have more money to apply to the next one. This strategy can pay off small debts fast, but it may cost you more in interest, especially if your larger debts are substantial. If you don’t have any high-interest debts, the bottom-up strategy might work for you.

2. The top-down strategy is similar to the bottom-up strategy, except instead of paying off the smallest debt first, you pay off first the debt with the highest interest rate, while making the minimum payments on your other debts. If you have high-interest debts, the top-down strategy method could save you a substantial amount.

3.The elimination strategy eliminates debts rather than paying them. If you’re making a $500 car payment every month, for example, consider a less expensive alternative. If you can reduce that payment to $300, you gain an extra $200 a month for your other debts. Merge the strategies by eliminating or reducing one big debt and then using one of the other two approaches.

Many who face overwhelming debt simply need a payment strategy and a little discipline. For others, however, bankruptcy may be the only realistic solution. If you’re anywhere in or near the Chicago area and your debts are getting out of control, discuss your alternatives as quickly as possible with an experienced Chicago bankruptcy lawyer.