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How you can eliminate your debt without entering bankruptcy

If you're in over your head with debt, there are a few different techniques you can use to get out of debt. By taking some of these steps, you may be in a position to pay back your debts more quickly than expected and without having to seek a bankruptcy. If you find that even with these techniques you're still falling behind, then your attorney may have other ideas, like filing for bankruptcy or negotiating with creditors directly.

The first thing you need to do is to determine which debts you owe. Write them down in a list, so you can see the balance and the interest you're paying. You'll want to spend the most money on high-interest, high-balance debts, since these cost the most to you over time. Once you pay off that debt, consider using the money you paid into it to pay more on your second highest debt and so on.

The next thing to consider is your budget. Making a minimum payment is usually a bad idea, since it can mean paying much more on a debt over the course of the next several years. However, if you can pay a little bit more than your minimum and focus on higher payments on debts with high interest rates, you'll find yourself out of debt sooner.

Every time you pay off a debt, make sure you don't take on more. If it's a credit card, consider destroying it, freezing it, or taking other steps to make sure you can't put money back on it. If you find that you don't like how long it takes to pay off the first card because of a high-value debt, consider paying off lesser cards first. This allows you to see progress, which can keep you interested in paying off more debt in the long term.

Source: Wise Bread, "6 Steps to Eliminating Your Debt Painlessly," accessed Aug. 24, 2016

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