The average Texas household has about $15,000 in credit card debt, and it’s not uncommon to pay an interest rate of 20% on an outstanding balance. Therefore, it’s generally in your best interest to pay down this type of debt as quickly as possible. There are multiple strategies that you may be able to use to accomplish this goal.
Create a repayment plan
The snowball method of paying down credit card debt has you focus on paying down the card with the smallest outstanding balance first. The avalanche method of paying down credit card debt has you start by paying down the card with the highest interest rate. Although it may take more time to eliminate your debt with this method, it will usually save money over the long run.
Is bankruptcy an option?
Filing for Chapter 7 bankruptcy may allow you to eliminate your unsecured debts in a matter of months. However, you may be at risk of losing your home, car or other assets. Furthermore, the fact that you sought a liquidation bankruptcy will remain on your credit report for up to 10 years.
What to consider before filing for bankruptcy
Prior to filing for bankruptcy, you may want to consider consolidating your existing balances. For instance, it may be possible to transfer them to a new card that charges a lower interest rate. You may also be able to obtain a personal loan, home equity loan or home equity line of credit that can be used to consolidate your outstanding debts.
If you are having trouble paying down your credit card balances, it may be in your best interest to speak with an attorney. He or she may explain the various strategies that might be used to help you better manage your debt. If you choose to file for bankruptcy, your attorney might be able to help you fill out your petition. Your legal representative might also provide more information about how the automatic stay works.