Debt Troubles?--Prioritize it!



Because you have debt troubles, this list will help you prioritize your debt—beginning with high priority creditors you should definitely pay first, then optional payments to select creditors. Get a cup of coffee before you read this! Credit card debt divorce, debt consolidation, and consumer credit counseling will be explained in more detail on another page. For now, ONLY if you are sure you are going to go bankrupt, it is better to stop paying the credit card bills, make this a lower priority debt, and put the money towards paying neccessities and high priority debts.
Making smart choices now will help clear debt.

  • First, remember that child support is due regardless of the parent’s financial stressors—and is unlikely to change. I am listing childsupport first because it is probably already garnished.

  • Next, you should pay your family's necessities—Food is the top item in this section, but it also could be certain medical bills/needs. For instance, insulin. Many food items can be removed from Need to Want. There is nothing wrong with restructuring your lives to eat differently if it will help your family clear debt, avoid moving or foreclosure, and avoid bankruptcy.

  • Housing—are you planning on staying? If so, this is a high-priority debt.

  • Utilities--If you are really strapped, you may want to ask your utility service if you can pay the minimum. Utilities are QUICK to shut you off for non-payment. Unless they hear from you, it is likely you will be shut off unless you tell them you need assistance.

    Also, ANYONE can reduce your utility bills by 10-20% just by signing up for free! Go to www.kachange.comSave on electricy and gas. No matter where you live, you can reduce your energy costs, and you can tell your ex to reduce his/hers also, by switching energy providers. It is free, to switch, you just type in your account numbers, and it's easy. This referral program also allows you to pass the information onto others, which could also make you some much needed income right now.

    Use the following link: Go to www.kachange.com to begin saving right away on energy fees and utility bills. I personally saved 11% on gas and 20% on electric this year by switching providers. There is no fee to sign up for this program. You will still receive a bill from your old company.


  • Cars—if you would like to keep your car, then keep paying. However, I am pretty sure that there is no one on the planet who truly requires a new vehicle. Plus the costs associated are extremely high—liability insurance, possibly collision/comprehensive insurance, tolls, gas, storage, maintenance, and registration fees.
    What if you can’t afford the car? If you require a car to work, then maybe you should consider selling it to purchase a more affordable used car. There are so many good cars that could work well into your new life.

    I drive a 10 year old Nissan and get 33 miles to the gallon. Outside of oil changes, I've never had to pay a cent into fixing broken parts. The car works! If I had to buy another car today, I would look for a used Nissan, Honda, or Hyundai in the local section of my newspaper or try Craigslist. Then, you could use the cash from the sale of your newer vehicle to cover the used one, and possibly improve your finances elsewhere in your budget also.

    Living on one vehicle is an option I see many families using today (for couples), and even for those spouses who move back home—some share vehicles with parents/siblings temporarily and share the costs.


  • Another significant bill is any debt secured with collateral. You must keep paying this bill if the collateral is your home--if you want to keep the home. Otherwise, it’s probably safe to make this bill a lower priority—again, depending on what you listed as the collateral.

  • Last in this section of important debts is IRS tax bills. These bills will not go away. You will be able to renegotiate if your financial situation has changed, but you should plan to continue filing your taxes every year regardless if you can pay or not.

OTHER DEBTS? If you have any other debts, such as credit card debt—which is unsecured, any loans which are secured with collateral, student loans, medical bills?

More on medium to lower-priority debts soon. You may also like to read about Daniel and Josephine's personal journey out of debt at Eliminate Credit Card Debts

Quick Notes on Personal Bankruptcy

Considering a personal bankruptcy, and/or foreclosure? Please get your education here by reading the following article:
Bankruptcy

If you choose to not pay your property taxes or mortgage, eventually your house will foreclose. If you file for chapter 7 bankruptcy, the creditors will stop calling, writing, and communicating with you. Chapter 7 will also discharge all or most of your unsecured debt. Chapter 13 bankruptcy means that the consumer makes too much money to file for chapter 7, and must REPAY some of the money he/she owes, over a period of time.

I highly urge anyone considering a bankruptcy to get more information about it immediately:

If you are pretty sure you need to file, this is the place to go! Legalzoom's rates are terrific--I have looked around at other company's rates for each state and experienced LZ's customer service for myself (with prices ranging from $1,099 to $2,099, plus the filing fee for the state, with the average state being $1,399).

The process is simple to get more information. You go to Legalzoom through the following link,


and register/sign in. This is important because Legalzoom saves all of your information so you can add/modify it for your custom documents. You complete the questionnaire, and an attorney will call you for a FREE consult. Only after that, do you decide if you'd like to use the attorney to customize your bankruptcy documents.

Legalzoom is highly experienced in preparing documents, however, if you require consumer credit counseling or debt consolidation, then the company to use is CareOne.

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