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What is the best approach to paying and managing debt?

When it comes to getting out from under debt, prioritization is often the key to success for many Pennsylvania residents. There are several ways a determined debtor might approach becoming debt-free, but often these are not feasible for one reason or another. For example, if you do not have the means to support your debt management goals, your determination may not be enough to save you. In another example, if you have decided to pay down your bills but have not been able to create an effective budget, your efforts might fail.

One time-tested approach is to sit down with your bills and prioritize them in order of importance. This is key because it gives you a complete picture of your debt as a whole. In turn, you will have a better understanding of which debts have the harshest consequences for non-payment and which debts are the most important for your survival and general well-being.

Below you will find a brief list of debts in the order of importance for prioritization.

Necessities of life: Examples include making the minimum payments on mortgages, utility bills and car payments.

Legal obligations: To avoid harsh consequences, always pay legal obligations such as taxes and child support payments.

High interest debts: As you might expect, these include credit card bills and loan payments.

Deferred loans: Last on the list is debt that allows you to make deferred payments, e.g.,student loans.

Finally, know when your goals are out of your reach and seek authoritative assistance. For many, this means consulting with an attorney about debt management. A lawyer can talk with you about your options and advise you whether bankruptcy can remedy your situation.

Source: FindLaw, "Which Debt to Pay Off First," accessed Aug. 29, 2016

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