How to Get Out From Under Excessive Debt
- 1). Assess your total income and total debt. If you have more income than debts, then pay off your debt load. If your debt payments exceed your income, then you will never pay off your debts.
- 2). Call your creditors to negotiate payment terms if your income is overwhelmed by monthly debt payments. You'll need lower payments to repay your debts.
- 3). File for bankruptcy if you cannot get out of debt by negotiating your payments with your creditors. Chapter 13 forces your creditors to negotiate payment terms with you to repay the debt over three to five years. Chapter 7 liquidates all of your assets to repay your creditors with whatever you have left. Any remaining debt is discharged.
- 4). Focus on putting as much money as you can toward the small debts first if you can manage the payments without bankruptcy. Once the small debts are repaid, you'll have more money to put toward larger debts.
- 5). Pay off high interest rate debts first if all of your debts are about the same size. This also helps to free up a large amount of money when those high interest rate payments are gone.
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