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The various ways to pay down debt balances

On Behalf of | Mar 11, 2020 | Chapter 7 Bankruptcy |

Virginia residents who have car loans, mortgages or credit card balances are carrying debt. While being in debt isn’t necessarily a bad thing in itself, individuals may find themselves unable to repay their creditors in a timely manner. Fortunately, there are steps that individuals can take to get a better handle on their finances. For instance, it may be possible to consolidate multiple balances into one monthly payment by obtaining a personal loan.

Debt can also be consolidated through a credit card balance transfer, home equity loan or other loan products. However, personal loans and credit card balance transfers are typically only available to those who have good or excellent credit. The debt snowball method can be helpful for those who are trying to get out of debt but don’t know how to get started. Those who use the debt snowball method will first make the minimum monthly payments on all of their debts each month.

If they have any money left over, they will put that money toward the account with the lowest balance. Although an individual may pay more in interest using this method, it can provide motivation for those who feel as if they are in a debt trap. This is because the first balance could be paid off in a matter of weeks or months, which means that a person sees signs of progress almost immediately.

Individuals who have credit card, personal loan or other types of unsecured debts may benefit from filing for Chapter 7 bankruptcy. Doing so may make it possible to obtain an automatic stay of creditor contact and collection activities. In many cases, debts can be discharged without losing property or paying anything to creditors. Attorneys may further explain the potential benefits of filing for a liquidation bankruptcy.