Debt Relief Blog and Resources

  Guest Post by Jeremiah Heck  The short answer: yes, you can still settle your debt even if a creditor sues you.  The longer answer: the settlement is often less than the amount owed, and in some circumstances, you might have grounds to sue the creditor (or take other legal action).  Read on to learn about your consumer rights in a debt collection lawsuit, debt settlement, and potential legal defenses when you find yourself facing unpaid debts.  Before You Settle, Verify According to Forbes, 70 million American consumers have credit issues ranging from collection agencies to lawsuits. Debt settlement — negotiating with creditors to settle for an amount less than you owe — is an effective way to avoid litigation.  Before you pay anything, however, verify that the debt is accurate. Don’t assume that the credit card company, collections agency, or law firm has a valid complaint. Creditors and collections agencies have been known to sue the wrong person for a default payment. Get It in Writing The Fair Debt Collection Practices Act (FDCPA) gives you the right to ask a company to verify a debt. Mail a certified letter (return receipt requested) asking for verification in writing. Mailing it in this manner ensures that the creditor (or the company suing you) received your letter. It might protect you from additional late fees or interest. Did Someone Steal Your Identity? If you’re the victim of identity theft and have fraud prevention through your bank, credit union, credit card company, or a third party, you might not have to pay anything. If you don’t have these protections, you could negotiate with the creditor. Even though you end up paying for something you didn’t purchase, the creditor can clear your name — your real identity — so your credit score doesn’t suffer. Negotiate a Settlement Credit card companies prefer to settle rather than litigate, depending on the amount owed. Even a partial repayment is better than nothing. They want to avoid costly attorney fees and the time it takes to chase an unpaid debt could be used on more productive activities.  You have the right to negotiate a settlement with the creditor, even when they’ve filed a suit against you. Negotiating Tips from Uncle Sam The Consumer Financial Protection Bureau (CFPB) offers these suggestions when negotiating a debt settlement: Write down a summary of your monthly expenses, including the amount you want to repay and your take-home pay. Set aside a small amount for unexpected expenses (like a flat tire) or emergencies (such as an injury). Explain your plan to the collection agency, creditor, or law firm that’s suing you. Ask if you can record the conversation to avoid any miscommunication or misunderstandings. Ask the creditor to waive late payments that add hundreds of dollars to your debt. Ask about removing additional interest on the remaining balance. Don’t pay more than you can afford. Don’t sign any agreement until you fully understand the terms and conditions. You have the right to bring an attorney with you to negotiate on your behalf. How Much Will You Have to Pay? By the time your financial struggles reach the point of being sued by a creditor, it’s clear that you probably cannot repay your debt in full. How much you will have to pay depends on the creditor, the amount, and the age of the debt. In general, debt settlements are 25 to 50 percent of the original amount. However, this amount could change if you don’t abide by the repayment schedule. Defend Yourself Some consumers successfully resolve a credit dispute through the judicial system. One of the more common defenses is challenging the creditor’s right to sue. It’s common practice for the primary creditor to sell debt. You have the right to determine if the plaintiff has the right to sue you. To challenge the creditor’s right to sue, ask for the following: A credit agreement signed by you Documentation of the debt’s chain of custody beginning with the original creditor Check the Statute of Limitations Each state has its own statutes of limitations, or deadlines, on how long creditors have to bring a lawsuit against debtors. This deadline usually starts on the last day you were active on an account. If you prove that the creditor filed a lawsuit after the statute of limitations expired, the court will likely dismiss the case. File for Bankruptcy Filing for bankruptcy is usually the last option when you’re facing a creditor’s lawsuit. However, a petition for bankruptcy with the court stops all debt collection activity. Bankruptcy can wipe your debts away, but it also makes it challenging to borrow money in the future while your credit score recovers. It is in your best interest to explore other options before filing for bankruptcy, such as debt settlement or even debt consolidation. Can You Sue the Creditor? Creditors have the right to take legal action for a valid debt. You have the right to pursue legal action under the Federal Debt Collection Practices Act (FDCPA). When a creditor or their authorized representative uses unethical or unlawful collection methods, you might have grounds for legal action for FDCPA violations. Debt Collection Actions with Legal Consequences for the Creditor According to the FDCPA, creditors may not: Call you at your job or home during inappropriate hours (usually, between 9:00 p.m. to 8:00 a.m.). Make repeated phone calls (for example, calling you three times in a day). Call after being informed that you cannot pay your debt, or an attorney is representing you. Use verbal or physical threats to force you into paying. Make your delinquent debt public (or threaten to). Impersonate an attorney or imply that they are an attorney. Threaten you with arrest or imprisonment. Deposit or threaten to deposit a postdated check before the written date. Closing Thoughts You can settle your debt when a creditor sues you or takes one of the other actions outlined above. However, the one thing you absolutely should never do is ignore a legal summons or complaint. If you fail to respond to the lawsuit, the creditor will probably get a default judgment against you. You might have to pay for the creditor's legal fees, court costs, and interest on the balance due. Worse, the creditor might be allowed to garnish your wages or intercept a tax refund. Remember, there’s no shame in falling behind on loans or credit cards. You have several options to climb out of a financial hole, including working with a bankruptcy and debt relief law firm.  Award-winning attorney Jeremiah Heck focuses primarily on consumer law and legal representation in real estate, employment, and personal injury. His firm, Luftman, Heck & Associates, defends individuals in many types of consumer protection cases, including debt settlement and bankruptcy. He offers a legal perspective on consumer protection issues for SmartMoney.com, a prominent online financial website.    This is a test  testing testing testing testing

  Guest Post by Ben Walker Everyone deserves a vacation. Or at least that’s a common sentiment. But travel doesn’t come cheap, and it can seem like an unreachable goal if you’re in debt. According to the Federal Reserve, U.S. household debt balances climbed above $15 trillion in 2021. This included debt from mortgages, HELOCs, auto loans, credit cards, student loans, and more. If you’re dealing with paying off debt from any of these sources, you might find it difficult to understand how you can also work toward other goals, such as traveling. Rather than trying to do both things, consider removing your debt once and for all. It likely won’t be easy, but it’s possible. Here are a few steps to get started: 1. Identify your debt If you want to get out of debt, you need to know what type of debt you have and how much you’re dealing with. Before the start of any journey, it makes sense to get organized so you know how to get to the end. For your debt journey, you want to know exactly what you have to pay to get out of debt. This might be easy if you only have one major debt, such as a home mortgage. You simply have to check how much you’re paying each month and multiply that amount by the months remaining in the loan term. But if you have multiple debts, including credit cards and other loans, it could take more time to gather the information. Write down each type of debt you have and how much you owe. Another detail to add could be to organize each debt by how much interest you’re paying. Depending on your plan for paying down your debt, you might want to pay off the debts with the highest interest rates first (more on this below). 2. Create a budget Now it’s time to identify and organize everything to do with your income and expenses. To properly tackle the challenge of paying off debt, consider how much money comes in and how much money goes out on a monthly basis. This includes identifying all sources of income and your total income amount, as well as finding your total expense amount. Knowing exactly how much money you make and what it’s spent on might give you ideas on how you can spend less of it. For example, you might not realize how many monthly or annual subscriptions you pay for — are they all necessary? Is there another area of your budget where you didn’t realize you spend as much as you do? Take a focused look at your finances by searching bank and credit card statements. This can help you identify where changes might need to be made. Then it’s down to making decisions, such as cutting certain expenses so you can save money. And then your saved money can go toward paying down debt. Learning how to budget provides you with a lifelong resource. In one situation, it could help you pay off debt. But applied in different scenarios, budgeting could also help you avoid getting into further debt, including avoiding debt while traveling. 3. Start a saving habit Now it’s time to save, save, save all the money you can in an effort to be rid of your debt as quickly as possible. Part of starting any habit is setting goals to help you get there. In this case, your ultimate goal is to pay down your debt and, hopefully, stay out of debt in the future. Achieving this goal could pave the way for reaching other goals, such as traveling the world. But what should your saving goals be? It likely depends on your total debt and how much money you can afford to save each month. Because you already know how much debt you’re in and you’ve gone through the budgeting process, you can calculate how long it will take to be debt-free. The key here is to stay consistent, hitting your monthly saving goal or even exceeding it. How can you exceed it? Make more money so you have more savings. Picking up a side hustle or finding ways to decrease your expenses are options to help pad your monthly savings. 4. Choose a plan There are many different strategies and plans for paying off debt. Here are a few to consider: Debt avalanche — Make the minimum payment for each debt you have and then put any remaining funds toward the debt with the highest interest rate. Once that debt is paid off, move onto the debt with the next highest interest rate. Paying down your debts with the highest interest rates first could help you save the most money in interest charges in the long run. Debt snowball — Make the minimum payment for each debt you have and then put any remaining funds toward the debt with the lowest balance. Once that debt is paid off, move onto the debt with the next lowest balance. Paying down your debts with the lowest balances first could help keep you motivated to continue working toward your financial goals. Debt consolidation — With debt consolidation, you typically combine all your debts into one location, which could be a new loan or a balance transfer credit card. The purpose is to help organize your debt, reduce your number of monthly payments, and potentially get a lower combined interest rate. There’s not necessarily a best plan for paying off your debt. The best option for you is typically the one that helps you stick to your goals. Helpful travel tips It’s important to keep a few things in mind if your goal is to travel after paying off debt. Because traveling can be expensive, make sure paying for a trip doesn’t severely change your budget or put you back into debt. Here are some tips to consider: Use travel credit cards. As long as you never carry a balance and make on-time payments, using the right credit card can make all the difference for travelers. The best international travel credit cards offer useful benefits and rewards to help offset your travel expenses and enhance your experience. Use travel apps. Technology, including certain travel apps, can help keep your travel stress-free and more enjoyable. From Google Maps to Uber and beyond, there’s likely an app you can use to find activities, research hotel options, or solve another one of your travel needs. Consider travel insurance. Travel isn’t always predictable, which is unfortunate considering how much it can cost. But with travel insurance, your investment is more protected. The bottom line It’s possible to travel while in debt, but it might not be the best option depending on your situation. Because traveling typically costs a fair amount of money, it likely makes sense to pay off big debts before you travel. This can help remove the burden of debt from your shoulders so the only stress you have is planning a trip to your dream destination. Ben Walker is a credit cards and travel writer at FinanceBuzz who loves helping others make informed and financially sound decisions, especially when it comes to traveling the world. He does this by explaining key principles involving credit cards, budgeting, banking, insurance, investing, and more.

  Guest Post by Lyle Solomon Debt relief scams are rampant in the country, and perhaps this is why the Federal Trade Commission (FTC) issued new rules to protect consumers on September 27, 2010. Even though a decade has passed, many Americans are still not aware of the debt relief laws passed by the FTC for their protection, and that's unfortunate. Scammers take advantage of their ignorance and milk money without providing any service. If you owe money on your credit cards and are planning to work with a debt relief company, it's essential to know the provisions of the Telemarketing Sales Rule first. The provisions clearly explain the debt relief laws companies have to follow throughout the country. Here are a few significant debt relief laws that all the settlement and consolidation companies must follow. Debt relief companies can't charge advance fees Suppose you owe a significant amount of money on cash advance loans and need instant payday loan relief. You are spending sleepless nights thinking about it. Finally, you decide to work with a debt settlement company and get rid of your payday loans. After preliminary research, you make a list of debt settlement companies and call them one by one. The debt settlement companies promise to help you out. But there is a catch. You have to pay an advance fee before they settle your debts. You pay the fees, but the company doesn't deliver the services. To help consumers get fair deals, the FTC introduced a new law wherein debt relief companies can't charge advance fees before they settle a debt. This would prevent fraudulent companies from taking money based on false promises. Debt relief companies can't charge a fee unless they have made at least one payment to a creditor. They can charge fees after settling at least one of the consumer's debts. Debt relief companies have to create a proper fee structure Debt relief companies can't charge abnormal fees from consumers, and they need to have a proper fee structure. If a debt relief company settles multiple debts, the fee for a single debt should be in proportion to the total fee charged by them. If a debt relief company charges a fee based on the specific percentage of the total money saved by the consumer, then the percentage charged should be in proportion to each debt. It should be the same for each debt. Debt relief companies must open a dedicated account in an FDIC-insured bank As per the laws, consumers will keep their savings and fees in a dedicated account. The debt relief company has to open a dedicated account in an FDIC-insured bank for the consumers to set aside money for settling bills. Consumers will control the funds, and they can withdraw the money at any time without any penalty. The debt relief company can't be affiliated with the bank or charge any referral fee for this. Debt relief companies can't misrepresent facts Debt relief companies can't give false information to consumers. They can't make impossible promises and then break them. They have to provide a written agreement and specific disclosures to consumers. Consumers should get enough time to read and understand them. The written agreement has to be signed by the consumer and the creditor. Furthermore, before a consumer starts working with a debt relief company, they have to give specific disclosures regarding the following things: How do they plan to settle their debts How long it may take to pay off the debt The overall cost of the debt relief services The potential impact of debt relief programs on credit score Necessary information about the dedicated accounts It's important to note that the debt relief laws apply to the following companies: Debt settlement companies Debt relief companies Debt consolidation companies Credit counseling agencies      The law applies to for-profit companies. It does not cover non-profit organizations. Debt relief companies can't make false claims regarding their success rates and non-profit status. If you believe a company has violated debt relief laws, you can file a complaint with the FTC or file a lawsuit against the company directly. The bottom line Too many debt relief companies take money from consumers and put them in bigger financial trouble. Debt relief laws are in place to stop this harmful practice in its tracks.  Before signing any agreement with a company, check if it follows the debt relief laws. If it charges advance fees or refuses to provide you with specific disclosures, this should raise a red flag. Avoid companies that promise to settle your debts within a week. It's impossible. Best debt relief companies follow all the laws to avoid lawsuits and fines. Your aim should always be to work with these companies.  Lyle Solomon is a principal attorney for the Oak View Law Group in California, where he specializes in consumer finance. He has also written several articles on financial well-being. Connect with him on LinkedIn or tweet him at @lyle_solomon.

Guest Post by Lou Antonelli This global pandemic has placed an untold amount of stress on people trying to enjoy this "most wonderful time of the year," specifically related to the spent money on holiday shopping. A 2020 Credit Karma survey highlights that as well. More than half of consumers (54%) feel "more financially stressed about the holidays than they did last year." As we near the end of the second year of COVID-19 and are now dealing with national supply chain issues, the stress still lingers. Yet hard-working people are still going holiday shopping despite the pressure they feel. Holiday shoppers may suffer from Acute Financial Stress (AFS), according to one of the most regarded psychotherapists in the country, Dr. Galen Buckwalter. He is working with Beyond Finance to help clients understand their relationship with finances while going through the debt resolution journey. Managing financial stress makes a difference, but where do you begin? More than 56 million people over the age of 18 struggle with AFS. Many people silently suffer from fear and anxiety when dealing with their money, so it is essential to help people deal with not just their debt but the behaviors that led to it. In the end, you’ll be able to better recognize some triggers of financial stress, understand its detrimental effects, and prevent it from overtaking you this holiday season and beyond. Triggers of financial stress AFS is an active stressor in the lives of many hard-working Americans. Specifically, research has shown three principal areas where financial stress attacks people the most: Thoughts — Financial stress can cause persistent negative thoughts, such as beating yourself up over past mistakes. Feelings — Financial stress can cause feelings of fear, worry, or regret related to money. Behaviors — Financial stress can cause abrupt changes in behaviors, like avoiding social occasion. "We need to help take the edge off and help people learn about emotional patterns linked to money and finances. That way, we can all have better control of emotional responses. It's all about the person." — Dr. Galen Buckwalter People from all walks of life experience financial stress. Feeling financially uneasy during the holidays can lead to a heightened sense of low self-worth or despair. Many differing circumstances lead to financial stress, and if those dreary times happen during the holidays, it could make the anxiety even worse. Regretfully, debt accumulated at any time during the year can spiral out of control, and that's when debt relief is needed the most. Numbers of financial stress The annual "Holiday Season Tracker" from Morning Consult already shows signs of escalated stress: About 50% of people who have started holiday shopping have faced supply chain issues The most extensive section of American shoppers plan only to spend $100–$499 for gifts Millennials, the largest cross-section of the population, are "just getting by" (46%) or are behind on their finances (37%) 1 in 5 adults will shop on a "Buy Now, Pay Later" (BNPL) method Stress during the holidays is natural, namely as it pertains to personal finances. Without money, the festivities seem bleak. Without options to substitute for something to spend, more BNPL options like layaway or applying for credit cards increase the worry. A recent PYMNTS survey unveiled some more numbers that may shed some light on the reasons for that Yuletide fretting: 125 million U.S. adults believe they are living "paycheck to paycheck." 60% of Millennials earning more than $100,000 annually are "struggling to get by." 40% of Baby Boomers and seniors have said the same Reality of financial stress For most people struggling with debt, it becomes them. People living paycheck-to-paycheck begin to believe debt is who they are, not what they have.  There are ways out of debt, and they all begin with changing your behavior toward money. If you can't manage finances effectively during the holidays or throughout the year, how could you handle the stress associated with finances when things become uncontrollable? Money can create potent stressors, and people should learn about them. Dr. Buckwalter found the triggers of financial stress are like that of Post-Traumatic Stress Disorder: "Acute Financial Stress creates many of the same negative stressors as PTSD. This is why we teach leveraging mental strength to temper our physical response to chronic stress," says Dr. Buckwalter. "If you have experienced the nagging collector calls, the pain is familiar. Have you seen a stack of bills piling up and no income to stop it? You know the painful effects of financial stress. Any program focused on financial stress should help people to learn to manage that emotional anguish." The relationship between Americans and money has been strenuous for decades. More than 70% of people believe it is the number one stress in life. The reasons for that could be lack of financial literacy or inability to manage funds. Whatever the cause, Acute Financial Stress is real. Its triggers are real. And the impact on any quality of life is real. However, this can be managed and mastered. Prevention of financial stress Debt relief companies like Beyond Finance can aid clients in finding financial and emotional well-being through debt resolution. If people are successfully educated and empowered, they can finally focus on what matters to live the debt-free life they deserve. To manage and ultimately prevent holiday shopping stress, a life of debt relief and resolution will take work. This month, you are already consumed with where to get the gifts, what exactly to get, and thanks to the supply chain issues, how will I be sure my gift even gets here in time? There are ample reasons for your blood pressure to skyrocket already. You don't need a surprise credit card bill. You can't afford to make it worse. Beyond Finance and other reputable organizations can help if you need debt resolution. However, let's see if you can't avert the holiday blues first with these simple tips: Buy from the heart. Just because you spend half of your paycheck on one gift doesn't mean it will be valued more. Stop guessing and be sure you purchase something that is wanted rather than what you think. The gift is for someone you care about, so be sure it shows when that person unwraps the gift — regardless of how inexpensive it may be. Write your holiday honey-do lists. Don't get caught spending more than you have with a last-minute purchase. Make a checklist of everyone you want to get a gift and how you intend to afford it. Stick to that list. Check things off with satisfaction. And know your limits because staying within those boundaries now will save you a financial headache later. Take care of yourself first. People often spend more than they have and don’t stop to consider the cost this will pose to themselves. Self-care is crucial during the holiday shop-a-thons. How do you manage stress? If you don't know, there's no time like the present to find out and make improvements. Make credit card partnerships. Numerous credit cards compete for your attention, so take advantage of that. The ones that provide you the best rewards (i.e., points, cashback, airline miles) should be the cards you use — if you choose to use them at all. Those rewards aren't an excuse to go crazy. Stick to your budget, and the rewards will come. Sometimes determination and focus can help people get out of debt. What's essential is that other times, credit has been damaged, and loans aren't possible, so other options should be considered before bankruptcy becomes a stark possibility. Debt resolution companies can be trusted, and if you count on the process, you can even learn to trust yourself with your finances. And what a holiday gift that would be. Lou Antonelli is Chief Operating Officer of Beyond Finance, which is one of the largest debt resolution organizations in the country working to move their clients beyond debt. 

Have you ever trusted a company that ended up letting you down? Not only is this a horrible feeling, but it can also lead to financial ruin if you had invested a large amount of money in the business.  Companies that advertise debt relief sometimes sound too good to be true — can a company (that is trying to make money itself) really save you money or help you work toward being debt-free in a way that doesn’t leave you worse off? Can debt relief companies really be trusted to have your best interests in mind? The short answer is yes, some can. Legitimate debt relief companies do exist, but you as the consumer need to know what to look for in a company so you don’t end up getting scammed. Below, we’ll detail the signs of a trustworthy debt relief company, as well as some common myths about debt relief. We’ll ultimately answer this question: should you use a debt relief company?  In the end, you’ll be equipped to ask all the right questions to a debt relief provider and better identify a shady company well before you commit any of your own money to it. What are the signs of a trustworthy company? 1. Doesn’t make money until you save money A debt relief company may be in business to make money, but a trustworthy one will only make money if it also helps you settle your debt for less than you owed before, or if it helps you save money in other ways. These ways can include negotiating a lower interest rate for your debt or helping you pay off your debt in less time to minimize interest charges. You should beware of a company that charges upfront fees and doesn’t have a refund or money-back guarantee policy associated with those fees. You should also beware of a company that charges you whether or not it actually helps your financial situation improve. Top debt relief companies such as National Debt Relief and Freedom Debt Relief do not charge upfront fees for their services. This indicates that the company is legitimate and can be trusted to handle your finances without stealing your money. 2. Offers a free consultation A trustworthy debt relief company will offer a free consultation, either in person or over the phone, to discuss your financial situation, the amount of debt you owe, and other relevant factors that may determine whether or not you would be a good fit for the company’s services. If you come across a company that charges for this initial consultation, just know that most top debt relief companies do not. You shouldn’t have to pay anything up front to learn about a debt relief company and decide if you want to enroll in its debt management program. 3. Holds industry accreditations Trusted debt relief companies typically hold at least one, if not multiple, industry accreditations. These recognitions come from third-party organizations and set standards of ethical behavior in the debt relief industry. One word of warning, however: "Accreditations are only as valuable as those doing the accreditting...and for the most part (in the debt relief industry at least) that is going to be founders of major [debt relief] companies," says Adam Selita of thedebtreliefcompany.com. So you'll want to beware of any bias there. If you notice that a company is accredited with a multiple trade organizations such as the American Fair Credit Council (AFCC) and the International Association of Professional Debt Arbitrators (IAPDA), this signals that the company cares about providing legitimate and certified help to its clients. 4. Has plenty of (positive) customer reviews One of the most important indicators of a reliable debt relief company is positive reviews from multiple customers. Both positive and negative reviews can help you determine how the company treats its customers and how people feel about their interactions with company representatives.  However, if the majority of customer reviews or even a large minority are negative, this should be cause for concern. Make sure to read what customers are actually saying to determine if their negative experience was an isolated incident or if multiple customers have had the same problem. With debt relief being so closely tied to your financial situation, you need a company that continually pleases its customers and keeps its word. The best way to know if it does this is to read debt relief reviews yourself. --- Now that we’ve established the signs of a trustworthy debt relief company and what you should look for as a potential customer, let’s dive into some common myths in the debt relief industry and find out what you really can believe about debt relief. Common debt relief myths: debunked We asked experts in debt and finance to debunk some common myths or misconceptions related to debt relief. Just remember, every individual’s financial situation is unique, so while these debunked myths can alleviate some concerns you have about debt relief, they might not answer the exact questions you have.  To get your specific questions answered in a way that meets your needs, we suggest consulting a certified financial planner or credit counselor. Myth 1: Debt settlement companies can’t really help. Many people worry that a debt relief company will just rip you off. However, according to Andrew Latham from SuperMoney.com, “debt settlement companies can be expensive, but, on average, they can save clients two to three times what they pay in fees.”  You can always find cheaper debt relief options than working with a debt relief company, but your DIY or other solutions might not include the expertise, credentials, or experience that a debt relief company can offer, similar to how working on your own car may not produce the same quality of results as hiring a certified mechanic would. Contrary to what you might think, many debt relief companies really do have your best interest in mind and want to help alleviate the financial burden you are carrying. Just look for “legitimate companies with proper licenses,” advises Rasti Nikolic from LoanAdvisor. Myth 2: You have to pay for debt help. Debt relief companies seeking to make a profit are just one of many options you can turn to to get help with your unmanageable debt.  “There are plenty of debt charities out there and free online services that do not require that you pay anything throughout the process, and even those debt relief companies you do have to pay won't hide any fees or costs and won't make you pay for anything you don't agree to,” says Scott Nelson from MoneyNerd. If the idea of spending money to save money sounds ridiculous to you, you’re not alone. Your best bet might be to find a nonprofit credit counseling service or debt relief agency, such as Greenpath Financial Wellness, that can help you work towards getting out of debt with fewer fees or less     impact to your credit score. Myth 3: Debt is impossible to get out of. This is simply not true. Not only can you take steps to manage your debt so that it doesn’t consume your life, it is also completely possible to become debt free with the right kind of help. “The best thing to do is research all your options, start a budget, and set goals,” according to Nelson. Sometimes, the weight of debt can feel so crushing that it almost seems easier to hang onto it than to try to pay it off. This feeling is completely understandable and common. However, you don’t need to lose hope of being debt free. Many honest debt relief companies do exist, and while they still seek to make a profit, their strategies and know-how can be of great help to you, and as we mentioned earlier, good companies only make money if they do actually help you save money or settle your debts for less than originally owed. So don’t give up! Debt relief is a process, but being debt free is a realistic and attainable goal. Myth 4: Debt relief will take forever Just as debt accumulates over time, “debt relief requires commitment and time” (Lou Antonelli, Beyond Finance). The debt relief process typically takes 24–48 months to settle all possible debts, but this is small in comparison to a lifetime of debt if you leave it unresolved. According to a 2021 Harvard Kennedy School report, 74 percent of people who start a debt relief program have at least one account settled in the first 36 months, and in fact settle over half of their enrolled debt on average during this same time period. These are encouraging statistics and hopefully help you realize that in the grand scheme of things, debt relief doesn’t take forever at all, and may be well worth your time if you are feeling financially buried and looking for a way out. Myth 5: You can’t negotiate debt on your own. According to Fred Hoffman from Seniors Life Insurance Finder, “there is nothing wrong with trying to negotiate with your creditor by yourself.” While this is the case, this doesn’t mean that negotiating with creditors is easy. A debt relief company comes with a staff of certified debt experts who have worked with creditors across the country and settled debt before. If you are trying to negotiate without any help, you forfeit this additional expertise. However, if you have some finance background and feel confident in your negotiation skills, it is completely possible to negotiate your own debts and try to reach a settlement with your creditor(s). -- Now that you know how to identify a legitimate debt relief company and have clarified some incorrect information you may have heard about debt relief, the question remains: is debt relief right for you? Should you use a debt relief company? The answer to this question will always be "it depends." However, we asked debt relief experts what makes an ideal candidate for debt relief services, and here’s what they shared. If you check enough of these boxes, debt relief might be for you: If you’ve identified yourself as a good candidate for debt relief, you can find trusted, top debt relief companies using your newfound know-how, and ultimately, you can avoid trusting the wrong company to negotiate down your debts. Happy debt relief!

Guest Post by Ben Walker Traveling is an excellent way to broaden your horizons, whether it’s exploring a landscape you’re not familiar with or immersing yourself in a new culture. But it can get expensive. According to a 2021 travel trends report from AARP, millennials plan to spend $4,017 on travel for the year, Gen Xers plan to spend $5,028, and baby boomers plan to spend $6,691. These numbers can vary depending on your destination, the number of people traveling, and your length of stay. But after accounting for flights, hotel stays, a rental car, activities, food, and other common travel expenses, you can easily find that your total trip ends up costing thousands of dollars. Do you want to travel but think it might put you into debt? Here are five ways to approach traveling without ending up owing anyone money. 1. Start a travel budget Budgeting is one of the most effective ways to save money for specific financial goals, which could include saving up money for a trip. There are different budgeting techniques, so you should choose the one that works best for your situation. That could mean taking a certain amount of money out of each paycheck or having a goal to hit each month — just use whatever strategy fits your lifestyle and helps you stay motivated. Regardless of the budgeting method, track your total income and expenses. This will give you an overview of your financial situation and pave the way for making smart future decisions. And tracking your finances is easy with certain finance management tools. Once you know the exact amount of money coming in and going out, focus on the areas where you might be able to cut your spending. This can be helpful if you feel like you have no room left in your budget to start setting money aside. But if you have room to cut back on unnecessary spending, you have room to fund your travel savings. To potentially make things easier for yourself, consider setting up automatic transfers from your main bank account to a specific account for your travel budget. 2. Use the right credit cards You might think that using credit cards would result in more travel debt. And in some cases, that could be true. It’s easy to throw all your travel expenses onto a credit card and then worry about paying it off later. But this type of strategy can quickly lead to racking up credit card debt that soon becomes too difficult to manage. If instead you approach credit cards with the mindset that they’re tools to be used for reaching your financial goals, you might be more likely to exercise some caution. This doesn’t mean you can’t use credit cards for all your travel expenses, but you should only do so if you’re planning to pay off your balances each month. Using this method, it makes sense to use the best travel credit cards to fund your travels. You can earn credit card rewards on all your eligible expenses, including everyday purchases such as groceries and gas. These rewards can then be used to help cover flights and hotel stays, which are often two of the biggest travel costs. Be sure to compare different credit cards and the rewards they earn so you can get the most out of your credit card rewards. 3. Stay flexible with your plans It may not always be possible to have flexibility with your travel plans. You might have one window of vacation time that you can use during a certain month of the year and that’s it. If this is the case, you unfortunately won’t have as many options for decreasing your travel costs. But if you’re able to be flexible with when and where you travel, you can find a lot more budget-friendly options. Peak times will vary depending on your destination. But, for example, many Americans want to travel during the summer months because their kids are out of school and the weather is nice. This causes prices to rise in certain areas for flights and hotel stays because a lot more people want to travel during these peak months. If you’re flexible with your plans, you can avoid traveling anywhere during a destination’s peak season(s), which should cut your travel costs by a fair margin. Being flexible on your destination itself can also help cut costs. If you simply want to visit an area with beaches, you could save a lot of money by traveling to the relatively inexpensive countries of Southeast Asia rather than taking an expensive trip to the Maldives. 4. Do your research Along with having some flexibility in your travel plans, you should also do the proper research on where you’re traveling before the dates of your trip. This includes knowing how you’re getting there and back, where you’re staying, and what you’ll be doing while you’re there. Apart from giving you a plan for your travels, doing research can also offer opportunities for you to save money. For example, it’s easy to book a flight through an airline’s website, but how do you know you’re getting the best deal? To compare flight prices, use tools like Google Flights, Skyscanner, Kayak, and others to see which airline and flight route might offer the most savings. This same strategy can be used for hotel stays and car rentals as well, though the sites you use will likely be different. Even if you’re planning to use credit card rewards to book award flights or award stays, this type of research can help you save points and miles. You can then use your saved rewards on more travel opportunities, further decreasing your travel costs. 5. Consider travel insurance Do you need travel insurance while traveling? Not necessarily, but it’s not a bad idea. In many cases, travel insurance is cost-effective and could help you recoup expenses for unforeseen circumstances that arise during your travels. For example, what happens if you have to cancel your trip? Or what if you incur emergency medical expenses while overseas? Credit card travel insurance can cover certain things, such as trip interruptions or cancellations, but a travel policy from an insurance provider is typically more robust. If a travel insurance plan that costs a few hundred dollars covers you for thousands of dollars worth of medical treatments or pays to replace your expensive smartphone, the policy more than pays for itself. The bottom line Overall, there are plenty of ways to avoid travel debt, though the best ways for you will depend on your lifestyle and financial goals. But before you consider saving up for traveling, you should first pay off any debt you may already have.  Traveling will likely cost some money, even if you follow these tips. So going on a trip before tackling existing debt may not be the most financially sound course of action. Learn how to pay off debt beforehand, and you’ll have more financial freedom to start your travels. Ben Walker is a credit cards and travel writer at FinanceBuzz who loves helping others make informed and financially sound decisions, especially when it comes to traveling the world. He does this by explaining key principles involving credit cards, budgeting, banking, insurance, investing, and more.

Guest Post by Orlando Rodríguez  DISCLAIMER: The information provided in this article does not, and is not intended to be, legal, financial or credit advice; instead, it is for general informational purposes only.  Debt settlement is when creditors or collection companies agree to clear a debt for less than you owe. It sounds simple in principle — and very convenient — but is it a money-saving tactic or a credit trap? What are the risks of debt settlement, and what are the alternatives? If you’re confused by debt settlement, you’re in the right place. In this brief guide, we’ll explore what the term means, and how it can affect your credit. What is debt settlement? When you settle a debt, you pay your creditor or a collection agency less than you owe, including existing interest and fees. Debt settlements are usually lump-sum payments, though some organizations allow consumers to set up payment plans instead. Debt settlement pros include: Reduced pressure from creditors A fresh financial start The chance to avoid bankruptcy The risks of debt settlement include: Serious credit damage Unexpected tax bills Extra fees and penalties Before you negotiate with a creditor or collection agency, think seriously about your options. Don’t make any decisions until you know what you’re up against. What are the advantages of debt settlement? We touched on the advantages of debt settlement briefly above. Now, let’s look at each plus point in a little more detail.  Reduced financial pressure Debt can feel like a crushing weight. Constant calls from creditors and collection agencies cause anxiety, and the guilt associated with outstanding debt can lead to mental health issues. Perhaps unsurprisingly, getting rid of a debt can bring emotional relief. A fresh start If you currently pay a lot of money toward your debts every month, opting for debt settlement could help you find financial balance in the long term. Debt settlement offers don’t appear by magic — it takes a while before creditors begin to negotiate — but they’re a quicker route to a debt-free status than minimum payments. After you eliminate your debts, you can start again. That’s perhaps the biggest debt settlement plus. No bankruptcy Debt settlement can help you avoid bankruptcy. If you have assets you’d rather not part with, or you’re worried about the impact personal insolvency might have on your small business, you could be better off settling your debts than filing for Chapter 7 bankruptcy. If you’re hovering between bankruptcy and debt settlement, consult with a financial professional to find the best option for you. What are the negative effects of debt settlement? It’s wonderful to imagine a fresh start—an end to overwhelming monthly payments and the shame associated with unmanageable debt. There are downsides to debt settlement, however. Serious credit damage When you settle a debt for less than you owe, it makes a negative impact on your credit report. When you negotiate settlement terms and your original contract with the lender is modified, you’ll damage your payment history and your credit score will go down. Unless you’re able to negotiate to have them removed, delinquent payments and collection accounts will stay on your report for seven years—even if you settle. The impact on your credit score depends on the terms of the settlement and how it’s reported on your account. Unexpected tax implications Many people are surprised by the tax implications of debt settlement. When you settle a debt for less than you owe, part of it is written off—and the IRS sometimes considers the forgiven portion taxable income. On the face of it, that doesn’t seem fair—after all, you didn’t physically receive the forgiven portion of your debt. Nevertheless, you may need to report that amount to the IRS and if applicable, pay taxes on it. The tax-related rules that apply to debt forgiveness are pretty complex. To find out where you stand, ask an accountant or a financial advisor before settling debt. Extra fees and penalties Debt settlement strategies take time to come to fruition. While you wait for an opportunity to negotiate, your unpaid debts will accrue interest and fees. Sometimes, collection agencies charge additional recovery fees, which they apply when they agree to a settlement. If you agree to the settlement amount, if part of your agreement, you’ll also need to pay those fees. What are some alternatives to debt settlement? Not sure debt settlement is right for you? In that case, consider these alternatives: Renegotiation — Ask your creditors for an interest rate reduction, or talk to them about reducing monthly payments. Debt consolidation — Consolidating your credit cards and loans into one single lower monthly payment can greatly reduce the amount you spend on debt every month.  Credit counseling — If you have trouble creating a workable budget and need help figuring out your finances, speak to a credit counselor or financial advisor. A debt management plan — Under the terms of a DMP, you make payments to reduce the amount you owe to all your creditors at once. Chapter 13 bankruptcy —Your finances get reorganized and you make court-mandated payments for a set amount of time after you file for Chapter 13 bankruptcy.  Chapter 7 bankruptcy — Chapter 7 bankruptcy wipes the slate clean—but it’ll be difficult to obtain credit for a while, and the bankruptcy will stay on your record for 10 years. Bankruptcy is arguably the most extreme solution to debt. Consumers who opt for Chapter 7 bankruptcies have to liquidate many of their assets before they’re deemed debt free. Under the terms of Chapter 13 bankruptcies, people are allowed to keep some of their assets. Chapter 13 is safer if you own your own home or have valuable possessions you want to pass on. Speak to an experienced financial advisor and consult with a bankruptcy lawyer before choosing voluntary insolvency. How do you settle a debt? If you decide to proceed with a debt settlement strategy, you can take a DIY approach or work with a debt settlement company. Let’s review both options.  The DIY route Creditors are unlikely to negotiate with you if they believe you can continue to make monthly payments or that you can pay the debt in full. To move into debt settlement territory, it’s best if your accounts are already delinquent by at least 90 days. If you want to continue missing payments while negotiating, know that there are serious credit-related ramifications associated with terminating payment in this way.  So, consider keeping up with payments while at the same time building a lump sum to pay off the debt. Before you quit paying, talk to your creditors about reducing monthly payments.  If you do stop paying your loan or credit card bill, late charges and fees will accrue and your credit score will drop. So, if you go the DIY route, know what you can and can’t afford to do, and find an agreement with the creditor that works best for your situation.  Note: Remember, your credit score will drop dramatically if you stop paying your debts, so you’ll find it very difficult to obtain a loan or a credit card—possibly for years. A settlement company If you have a lot of debts to settle and haven’t been able to negotiate with your creditors independently, a settlement company can help take the pressure off. Settlement companies negotiate with your creditors on your behalf, reducing the amount of direct contact you have with the companies you owe money to. Settlement companies usually charge fees. So, it’s important to factor those into your payment estimates. On the flip side, they can help you recover a sense of financial stability and may also provide budgeting advice.  Note: It’s hard to define what percentage of a debt is typically accepted in a settlement. Some companies won’t take less than 70 percent of what you owe, while others will go as low as 30 percent. Is debt settlement really worth it? In short, debt settlement is sometimes worth it if you can’t afford to pay off what you owe in full. If the risks of bankruptcy outweigh the benefits for you, and if you feel trapped under a mountain of debt, a settlement offer might bring peace of mind. If you decide to settle one or more of your debts, seek advice from a qualified tax professional about tax implications. Draft a savings plan to ensure you have the money to pay any taxes you owe at the end of the year, and create a solid budget to keep your finances on the level in the future. Finally, check out credit repair options, some of which could help you rebuild a solid credit profile. Orlando Rodríguez is a writer and content specialist for the Credit.com team dedicated to creating helpful, informative and eye-catching content. He completed his undergraduate work at the University of Utah focusing on Film and Media Arts. He’s written blogs and journalistic content for many different industries, and narrowed down his niche to the financial industry. In his off time, Orlando puts effort into crafting creative content around the arts.

Guest Post by Erin Ellis The COVID-19 pandemic has touched nearly every facet of our lives, from how we work and learn, to the ways we shop and spend time with our loved ones. Above all else though, the pandemic has shaken Americans’ financial security. According to the U.S. Department of Labor, over 55 million people have filed for unemployment since the beginning of March. While some of these folks are back to work, others may have months ahead of them until they can find a stable income again. Whatever your situation during this unpredictable time, there are a few things you can do now to ease your mind, begin to move forward, and ultimately recover from this crisis.  Understand you’re not alone  It’s important to note at the offset that if you’ve been laid off, furloughed, or lost hours or income over the past few months, you’re far from alone. Millions of people globally are also grappling with financial hardship. Although it is difficult to not let the uncertainty and strain of your financial situation weigh on you, try to focus on accepting it. The sooner you come to terms with your new reality, the sooner you can be in the right headspace to create a game plan and move forward with recovery. But also, try not to be too hard on yourself. As we all know, we’re living in unprecedented times, and no one could foresee how this year would unfold.  Get back to the basics Whatever your situation is, if you find yourself in dire straits, get back to the basics. First, take stock of your income and savings. If you’ve been laid off, how much will your unemployment benefits net? If your hours are reduced, what is your new weekly and monthly income? And how much do you have in savings to fall back on? Keep these numbers in mind.  Reevaluate your budget Next, use these numbers to reevaluate your budget and determine what you need to spend, what you can skip, and where you can cut corners each month. For example, groceries and toiletries are items you absolutely need, but you can be strategic about how you shop for them. Mortgage or rent payments, utility bills, and car payments most likely need to be paid, unless there’s a moratorium on bill collection, in which case you can skip these payments temporarily.  You should also call your creditors to make arrangements regarding your payments. This helps in two ways: 1) You might be able to arrange a lower payment or later payment date and 2) You are protecting your credit and service by having an agreed-upon payment arrangement.   Your budget on takeout, Netflix, and shopping, should be significantly reduced, if not cut altogether. Make every dollar count  Once you’ve determined what you need to spend each month, make every dollar allocated towards these necessities count. That means being mindful of what items are on sale at the grocery store, shopping wholesale at Costco or Sam’s Club, clipping coupons (Yes, those mile-long receipts at CVS can save you a ton!), and thrifting whenever possible. Lean on your network  Once you have your financial house in order, work on getting back on your feet. If you’ve been laid off, let your entire network know you’re in the market for a new job on your social media platforms, especially Facebook and LinkedIn. Refresh your resume and set up virtual networking meetings with potential new employers. If you’ve been furloughed or have reduced hours, still reach out to your network – you never know what odd job or part-time opportunity could earn you some extra cash in the meantime. Most importantly, be open to taking a position that’s outside of your wheelhouse. While it may not be your dream job, it will help you get back on your feet.   Have a plan for next time Yes, we all know that even the best-laid plans can go awry, but when it comes to your finances, you can never be too prepared. Factors outside of your control, like a stock market crash or a global pandemic, can occur at any time. While you may not find yourself on solid financial footing in the near term, once you do, it’s important to have a plan for next time — because there will be one.  Off the bat, you can start to build a rainy day fund by opening a high-interest savings account, setting up automatic transfers from your checking account each month, and adopting a low-spend lifestyle so you can put extra money away. Also, know who you can lean on, like a spouse, parent or friend, if push comes to shove.  While financial recovery may seem like a daunting task, you’re far from alone in this journey. Millions of people around the world are also grappling with the fallout — both physically and financially — of COVID-19. Although the path to financial recovery is not easy, by getting back to budgeting basics, stretching your dollar, and leaning on your network, you’ll be on your way to solid ground. And when crisis strikes again — which, inevitably, it will — you’ll be prepared with a rock-solid plan.   Erin Ellis is a Financial Educator and Accredited Financial Counselor at Philadelphia Federal Credit Union (PFCU), one of the top five credit unions in the Greater Philadelphia area. Her chief responsibility is to give members the tools and knowledge they need to better manage their money and achieve their financial goals. In this role, she is responsible for creating PFCU’s financial education curriculum, providing one-on-one counseling with members, and presenting seminars on various personal finance topics, including, budgeting, saving money, credit, identity theft, and homebuying to PFCU members and a wide network of social services organizations throughout the Philadelphia region. 

If you have overwhelming debt that you’re ready to pay off, you may be interested in getting help from a debt relief company. Debt relief companies can help borrowers eliminate their credit card debt, student loan debt, medical debt, and other types of unsecured debt through debt settlement and debt consolidation. But with more than 100 debt relief companies listed on BestCompany.com, how do you know who is the best debt relief company to work with? The more than 19,000 real customer reviews offer some insights. If you’re looking for a debt relief company, consider these factors from 5,888 reviews from verified customers from May 31, 2018 to May 31, 2020.  Great customer service Customer service was a common theme in both positive and negative debt relief company reviews. Out of 5,053 five-star reviews, about 22 percent mention “service,” while about 11 percent of one- and two-star reviews mention “customer service.” Resolving your debt can take anywhere from a few months to several years. Choosing a company that answers your questions in a timely manner can make the process much smoother. One verified customer of Freedom Debt Relief, the highest-rated debt relief company on BestCompany.com, wrote that the company has an entire team of people it can refer customers to if the customer service representative they speak with can’t answer their question. “They do what they say they're going to do and give great support,” Angela wrote. “I'm very confident in them and very happy I signed up.” Clear terms Make sure to get a clear understanding of how your debt relief program will work, including how long it will take. Many negative reviews of debt relief companies mentioned misunderstandings over the timeline.  For example, Eric from Jersey City, New Jersey, wrote about Freedom Debt Relief, “I did not like the uncertainty of the end cost and graduation date moving all over the place. I always paid on time and more than the agreed amount, but the graduation date currently extends several months beyond the four-year agreed period. This is not at all what I understood when I signed the agreement.” Be sure to find out how long it could take to finish the debt relief process.  Other reviews complained about not realizing debt settlement might open them up to legal action or negative effects on their credit score. If you’re pursuing debt settlement, it’s important to understand that withholding payment from your creditors could lead to them pursuing legal action against you and will likely lower your credit score, as well. Only work with debt settlement companies that are honest about these risks upfront. The right kind of debt relief services While some debt relief companies offer both debt consolidation and debt settlement, some only offer one or the other.  Debt consolidation is consolidating several debts into a single debt, often through a debt consolidation loan. Debt consolidation is often a better option for those who have a good credit score, as this can help borrowers obtain a consolidation loan with a lower interest rate. Debt consolidation may also be right for you if high-interest debt is a concern. Debt settlement involves negotiating with creditors to have part of your debt forgiven. When you enroll in a debt settlement program, you typically stop paying your creditors and instead save that money for a later lump sum payment. Meanwhile, the debt settlement company works on negotiating with your creditors to reduce your debt, in exchange for paying it off in a lump sum. Debt settlement often hurts your credit score initially, when you stop making payments, and it could result in higher taxes because the IRS considers forgiven debt to be taxable income. But it could also reduce your total debt amount significantly. Debt settlement may be the right option for you if you’re most concerned about the amount of debt you hold. Once you decide whether you’re interested in debt consolidation or debt settlement, make sure you choose a company that offers that service.  Affordable pricing The cost of debt relief services came up frequently in BestCompany.com debt relief reviews. About 12 percent of reviews from verified customers mentioned the words “money,” “cost,” “price,” or “fee.” Even a five-star review of Freedom Debt Relief from a verified customer mentioned high prices as a negative. “Their negotiations are excellent but their fees (are) a little high,” Anita wrote. Some debt relief companies base their prices on a percentage of the customer’s enrolled debt, some base their pricing on the amount of money they save the customer, and others simply charge a flat-rate fee.  A flat-rate fee may be a good option if you have a large amount of debt you’re planning to enroll in a debt relief program. Performance-based pricing is also a good sign in a debt relief company — this pricing model demonstrates faith in the company’s ability to save borrowers money on their debt.  Before you sign any contracts, be sure to find out all the fees associated with the company’s debt relief services.  Compatibility with your situation Debt relief companies have different requirements and availability. For example, not all debt relief companies operate in every state. As you’re narrowing down your options, make sure the companies you want to work with operate in the state where you live. Some companies offer services in states where they don’t have a physical presence. If you don’t mind working with a company over the phone or email, that may not be a problem for you. However, if it’s important to you to be able to meet with company representatives in person, make sure they have an office location that’s accessible to you. Many debt relief companies also have minimum debt requirements; if your total debt amount is lower than the minimum debt requirement, you won’t be able to use the company’s services.  One reviewer wrote of Pacific Debt, “They couldn't offer any kind of debt relief because your debt had to be 10,000 or more.” Also be sure that the debt relief companies you’re interested in handle the kinds of debt you hold. Some companies specialize in certain specific kinds of debt, and some debt relief methods only work for unsecured debt.  Finding the right debt relief company You can avoid many problems down the road if you do your research upfront, making sure to choose a debt relief company that offers the right kind of services for your specific situation, with affordable pricing and great customer service. One way to find those companies is to compare debt relief company reviews from real customers. Once you’ve narrowed down your list of potential companies to work with, it’s also a good idea to take advantage of a free consultation and speak with a company representative, asking any relevant questions about the services they provide. With research and data on your side, you can find the right debt relief company for your needs.

Americans held more than $4.3 trillion in debt as of July 2021, according to the Federal Reserve. There are tons of potential sources of debt for the average person, including mortgages, auto loan debt, student loan debt, credit card debt, medical debt, and tax debt. If you have debt from multiple sources, you may be wondering where to begin paying it down. Should you choose based on the lender? The principal? The interest rate? There’s no one right answer. “The repayment strategy really depends on your personality and what will ensure that you stick to the plan,” says finance coach Maggie Germano. "You should use the repayment strategy that you know will be the most motivating to you." “In the end, the most important thing is that you’re working to repay all of your debts,” FinanceBuzz writer Matt Miczulski agrees. Here are some factors to consider when it comes to debt repayment: Start with the minimum monthly payment Your starting point should be to ensure you consistently make the minimum monthly payment on each debt. Making the monthly minimum payment on each of your debts will keep you from racking up extra interest and fees that add on to the principal.  And making your minimum payments on time will not only keep your debt from growing; it will also improve your credit score. Then, put as much additional money as you can toward the monthly payment of one debt at a time. Once that debt is repaid, start on the next. If you’re having trouble making the minimum monthly payments on your debts, consider using the services of one of the top debt relief companies. A debt relief company can provide solutions including debt consolidation and debt settlement.  Keep timing in mind For some debts, the interest rate may change over time. For example, you might have a loan with a variable interest rate, or a credit card with an introductory interest rate. In those cases, you'll want to pay down the principal while you can take advantage of lower interest rates — especially in the case of credit cards. "That is because once that (introductory) period ends, the interest rate is going to skyrocket, and a lot of the time, the interest will be retroactively applied, so it will be a large sum," Germano says. When you decide which debt to focus on repaying first, take into account any changes in interest rates that may be coming up. Use the debt avalanche method The debt avalanche refers to a popular strategy where you pay off debt starting with the loan that has the highest interest rate. The thinking behind this strategy is that the higher the interest rate, the more money the debt costs over time. Tackling high interest debt first, such as credit card debt, should save you money, no matter your financial situation. "High interest rates on credit cards can be debilitating as they make your balances get bigger and bigger," Germano says. "Plus, you're more likely to be able to defer something like student loan payments if you are going through hard times. Credit card companies usually aren't as understanding." Consider the difference the interest rate can make in paying off a $10,000 debt. If you have a student loan of $10,000 that you borrowed at a rate of 3.25 percent, it will cost you more than $2,600 in interest alone over 15 years. Paying off the same amount of money in credit card debt at an interest rate of 24.99 percent would cost you more than $7,600 in interest alone over only 5 years. “If it’s important for you to save the most amount of money in the end, focus on paying off your most costly debts first,” says Miczulski. “While it might take longer to tackle each debt, it will save you the most money in the long run.” Use the debt snowball method The debt snowball refers to a strategy where you pay off debt starting with the smallest debt. Financial coach Dave Ramsey is a big proponent of this strategy. The idea is that even though you save more money by paying off debts with the highest interest rate first, starting small helps you gain momentum and build motivation by eliminating debts quickly. "If you're someone who needs to see progress and who benefits from celebrating small wins frequently, the snowball method is probably the best repayment strategy," Germano says. "That's because this method allows you to meet smaller goals sooner and more often than big goals." Miczulski started out with the debt snowball when he was saving for his wedding. "It felt so good that I knew I could start chipping away at my most expensive debt and, while it would take longer to pay off, I knew I’d stay motivated until I saw it though," Miczulski explains. The bottom line: Do what works for you There's no one-size-fits-all approach to paying off debt. What worked for your neighbor or accountant or the finance blogger you follow might not work for you. Maybe you, like Miczulski, will start out with one strategy and then shift to another. Or maybe you'll use a combination of several strategies. Just remember that if the goal is to get out of debt, then whatever method works for you is the right one.