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Debt relief and prioritizing debts

| Jun 17, 2021 | Debt |

While paying bills is part of life, when individuals in Michigan and elsewhere face financial troubles, the inability to pay bills is all one can think about. Struggling to make ends meet because of costs going up or income going down often means determining what bills to pay and how to address the growing debt one is facing. In such a situation, it is not only important to consider what repercussion one will face if a bill is late or not paid for a month, but it is also vital to explore what debt relief options one might have.

Prioritize debt

When it becomes a challenge to pay bills, one may have to pick and choose which bills they will pay each month. While this may seem like a gamble, the reality is that late payment of certain bills can have greater repercussions than others. Thus, it may be more important to pay one bill over another.

Bills that require priority each month are those that could result in major consequences. For example, a late auto loan could result in the repossession of a vehicle. Likewise, a late mortgage payment could trigger the foreclosure process. Therefore, these are two bills that are considered high priority. Others include utilities, as this could result in power, water or gas being disconnected, and court-ordered debts, as they could be punishable by jail time.

Lower priority debts

Debt that is considered a lower priority include credit cards, medical debt, student loans, personal loans, cable bill and subscriptions. While these debts are not considered high priority, they are still debts that need to be paid. In these matters, it may be more reasonable to seek a debt settlement or refinance. When several bills go unpaid, this can severely damage one’s credit score and financial future. Thus, it is important to consider ways to address this debt, such as debt relief options. This could look like filing for bankruptcy or moving forward with a bankruptcy alternative process.

Living with debt is very common for Americans; however, this does not mean that debt needs to control a person’s life. There are ways to manage debt and obtain debt relief. Whether that means settling debt with creditors, refinancing or filing for bankruptcy, it is imperative that one considers their options and what is most suitable for his or her situation and financial future.