Call today for a consultation
Making a Positive Difference In Your Life

Bad ways to combat debt

While people toiling in debt may see bankruptcy as an option, there may be other non-bankruptcy options to combat debt as well. However, just like any other way to resolve a problem, there are good ways and bad ways to do so. This post will highlight some of the unadvisable methods that people use to combat debt and why you should avoid them.

Using retirement accounts to pay down debt – This is not advisable because you are essentially stunting the growth of your retirement fund to pay down debt. Also, you are using money that is protected from creditors in the event that you must seek bankruptcy protection. Further, the costs associated with withdrawing money from retirement accounts simply isn’t worth the risk. Most withdrawals include a 10 percent penalty along with your regular tax rate.

Paying debts out of order – Some people may not have the right priorities when it comes to paying debt. For instance, they may focus on paying credit card debt while sacrificing car loan payments or mortgage payments. This can possibly lead to more trouble than needed. By doing this, you may put secured assets at risk at the expense of unsecured debts.

Instead it may be better to think about what you need most and pay bills accordingly. So think about shelter, transportation and food, then other bills should fall into place.

Paying debts without a plan – It is also unadvisable to throw money at debt without a viable plan to pay it off. So if you are paying bills simply to make collection calls stop, you may want to consider an alternative. 

No Comments

Leave a comment
Comment Information

Robertson, Oswalt & AssociatesOffice locations

Little Rock Office
1302 Cumberland Street
Little Rock, AR 72202

Toll Free: 866-311-3815
Phone: 501-588-4451
Little Rock Law Office Map

Benton Office
17724 I-30, Suite 8
Benton, AR 72019

Toll Free: 866-311-3815
Phone: 501-588-4451
Benton Law Office Map

Heber Springs Office
307 West Spring Street
Heber Springs, AR 72543

Toll Free: 866-311-3815
Phone: 501-588-4451
Heber Springs Law Office Map

Conway Office
1237 Front Street
Conway, AR 72032

Toll Free: 866-311-3815
Phone: 501-588-4451
Conway Law Office Map

Review Us Review Us Review Us
  • Local|
  • Toll Free|
  • Fax 501-537-4641|
  • Follow Our Firm