Prioritizing paying off debt
Florida consumers who are struggling with their obligations might wonder how they should prioritize paying off their debts. For example, a person may have student loan debt, owe money on one or more credit cards, have hefty mortgage payments, and have an auto loan. There are a number of factors that must be considered when choosing which debt should be paid off first. For example, while credit card debt may have high interest rates, a person may be most concerned about paying the mortgage in order to keep the home.
Credit rating is also a concern. Large credit card debts or falling behind on bills can have a negative effect on a person’s credit. Improving this score could be a person’s top priority if it is important to secure a loan in the near future. However, it is important to understand that a credit rating will not be improved immediately.
People should also think about their goals and how to balance those goals with a budget. It may be necessary to get a second job or cut some unnecessary expenses. A person who has student loan debt may be able to get a tax credit. Failing to pay a tax debt could have a serious consequences.
One solution for a person struggling with debt might be bankruptcy. It is important to keep in mind that tax debt and student loans generally cannot be discharged in a bankruptcy. However, if a person discharges credit card debt, it might be possible to keep up with tax and student loan payments. It is also possible to declare bankruptcy and keep property such as a home in some cases. This would involve filing under Chapter 13 and making a payment plan with creditors that lasts for three or five years.