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Can you get out of debt without filing bankruptcy?

If you are like most Floridians, you have a substantial amount of debt, a lot of it having to do with credit cards. While you would like to reduce that debt, so far you have been unsuccessful in accomplishing your goal. Your credit card balances seem to rise faster than you can pay them down, and every time you see the amount of interest you pay each month, you feel like just giving up.

Before your financial situation gets so out of control that you must file bankruptcy, CreditSesame.com explains that you have some other options

Budget

If you do not have a monthly budget, you should make one. Why? Because you need to know how much of your income goes to pay each bill each month. Do not forget to add in the monthly equivalent of bills you pay bi-monthly, semiannually, etc. such as insurance premiums. Once you see where your money goes, you may discover areas in which you can save. For instance, do you really need all those impulse buys you routinely pick up at the grocery store? Do you really need to eat out four times a week? Will you really be that uncomfortable if you set your air conditioner thermostat at 75 instead of 68?

As for your credit cards, use them judiciously. Whenever possible, use your debit card instead of a credit card. You pay no interest on debit card purchases; you do on credit card purchases.

Pay down

Once your budgeting activities give you some "extra" money each month, use it to attack your credit card that has the highest interest rate or the one that is nearly maxed out. Pay as much as you possibly can on that card each month, the more above the minimum payment the better. And stop using it. This reduces your balance in two ways. Of course you need to make minimum payments on your other credit cards.

Debt consolidation loan

If you have several high-balance credit cards, you may receive offers to take out a debt consolidation loan. One of these is another possible option, but read the fine print. What interest rate will you pay as opposed to the credit card rates you now pay? How much less will you pay each month for this one debt as opposed to the total you now pay on all your credit cards? In addition, realize that it does you no good to "pay off" your credit cards this way if you just start charging on them again.

This is general information only and not intended to provide legal advice.

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