Summary – Which Option is Best For You
When faced with unappealing choices it is natural to procrastinate. However once you’ve assessed your situation, gathered the necessary information and weighted out your options your path should be pretty obvious.
Once again here are your options –
Option 1 – The Pay Off Plan – If you can pay off your unsecured debts with help or the help of home equity borrowing then you are ready to take the first step which is to cut up your credit cards. You don’t have to close your credit accounts, which could potentially hurt your credit score, but as part of your strategy—you are not going to use your credit for a while. Your next step is to set up a payment plan by prioritizing your bills and comparing them to your income as described early on in this chapter. Recall that you start by paying off 30% of the debt that is closest to its limit and then 30% of the debt that is second closest to its limit and so on. Continue this behavior until all debt is retired.
Option 2 – Credit Counseling – If you decide you need the help of a credit counselor make sure you find a reputable one who can do it fast. Every day you put off is costing you more money. Understand that paying off your debts is a long term commitment and that most credit counseling will advise you to live on a very tight budget.
Option 3 – Bankruptcy – If bankruptcy is your last resort then file for it. The bankruptcy laws were created to give people a new start with their credit and if you are certain you have done your best to find money to pay your bills and failed then you shouldn’t ignore this option.