If you are one of those people who are struggling with their mounting debts, then it is time to start learning of other options to become debt-free. Being unable to pay your debts, you must check your financial situation or use financial software from IRESS that will help you handle your finances. Check out the following;
- Know the types of debts that you currently have.
- Know if the financial difficulty that you are in is temporary or for the long term.
- Decide among your debts that they should be repaid first.
- Determine if the exemptions are actually helping your property.
- Know the state’s wage limit.
After determining that point, you will be able to evaluate different alternatives and also pick the best one that perfectly suits you.
The Type Of Debt That You Owe
Determining the type of debt that you owe will determine the action that you have to partake in to be able to pay your creditors and allow you to avoid having the same debt all over again.
Car loans and mortgages belong to secured debts. This type of debt provides the creditor a special right to collect the property that you have promised as collateral for your loan. If you don’t pay the specific debt, the lender will be forced to collect the collateral, or your property will be foreclosed or repossessed.
An example of this is your credit card debts. Unsecured debts allow the creditor to file a lawsuit whenever the debt is not paid. It also requires the creditor to have a judgment first before the collection of actions. After the judgment, the creditor will be given the nod to garnish your wages, place liens on your real estate and charge your bank account.
The government debts include student loans, domestic support, or taxes. They are unsecured by providing unique collection rights to creditors. There are instances in which the government can take the tax refunds as payment for your debt.
What are the debts that you should pay first?
There are debts that need to be paid first then the others. If you are in doubt of which debt to pay, you must first categorize your debts and separate the ones which are a high priority because these are the debts that need to be paid first.
These high-priority debts are debts that have collateral like your house or your car. There are also unsecured debts that are of high priority like child support, utility bills, student loans, and others. Just think of the collateral that’s on the line if you don’t pay these debts, it will be foreclosed or will be taken by your creditor. For student loans, the IRS will intercept your income tax refund and for child support, you will be sent to jail if you refuse to pay. Ensure that you’re paid high-priority debts first before you pay low-priority ones.
Debts and expenses are somehow becoming a part of our lives. Although there are expenses that are considered essential, you have to ensure that your finances are well managed. For easier money management, you can use finance software from IRESS to handle these kinds of transactions.