Paying Off "Bad" Debt

Paying off bad debt can be done with determination and a sound debt repayment strategy. Bad debt is expenses unpaid using high-interest credit cards and not being able to fulfill to total balance in full. According to Money Central, total personal debt should not exceed 36 percent of your total income. Ultimately bad debts that are late in payment or unfulfilled reflect poorly on your credit.

Exceed the minimum payments on credit cards. Double the amount of payment as often as you can to get rid of debt fast. According to Motley Fool, the longer you take to repay, the more interest companies earn and the less cash you have available.

Use your savings. Cash out any savings or investments and use the proceeds toward debt repayment relief. By using your savings, you lower the chance of forfeiting too much money because savings generally doesn’t earn much interest.

Borrow from your life insurance policy. Repay the interest accrued from your insurance as soon as you can. Generally, the interest rate on life insurance is typically below commercial rates, so it gives more time for loan repayment than borrowing from a home equity loan.

Transfer a high-interest rate to a low interest rate card. Pay minimum amounts due on all of your cards except one if the card’s balance is too much to fit on a low-interest card. Cut debt down fast by moving onto the next card with the same aggressive repayment plan once the previous card reaches a zero balance.

Request a lower payment schedule that works best for you. Inquire about a getting a lower interest rate and appeal, if you have to, if you are rejected. Insist that you are trying to avoid bankruptcy—creditors may be more likely to work with you to protect themselves against loss.