It can feel like an uphill battle to try to pay off debts. For people in Illinois, getting out of debt may require an understanding of how to pay things off in the most efficient way possible. Debt is money owed by one party, sometimes called the debtor, to another party, sometimes called the creditor. There are many different forms of debt. A person who purchases more with a credit card than they are able to pay off each month will be carrying credit card debt. A person who takes out a mortgage to buy a home will have mortgage debt.
Among the first steps in any attempt to pay off debts is for the debtor to determine how much debt he or she has. It can be helpful to make a list of quick facts about each debt, including the type of debt, the amount owed, the minimum payment required and the annual percentage interest rate. Personal debt has a direct impact on a person’s credit score because it is used to calculate the credit utilization ratio, which is the ratio of the amount of credit used versus the total amount of credit available to the person.
There are as many strategies to pay off personal debt as there are people who have them. Two of the more popular strategies are debt snowball, in which a set amount is contributed to debt repayment every month, and debt avalanche, in which higher interest debts are paid off first.
An attorney might be able to help people in Illinois deal with their debts. An attorney who practices bankruptcy law may suggest different debt relief strategies, including Chapter 7 or Chapter 13 bankruptcy, to reduce or eliminate debts. In some cases, the debtor may be able to get rid of his or her debts while still maintaining ownership of important assets. A bankruptcy attorney might help with the drafting and filing of necessary legal documents.