I say start on your highest baring interest card first. Dont worry about size of debt. If you can pay atleast $1000 a month until all cards are paid off that would be awesome. I agree with you that closing an account will hurt your credit score, but credit isnt as difficult to build as people think. Leave the money that is already in your savings there. Once out of debt completely stay away from credit cards if you have other funds set asside for emergency.

5 Ways to pay off debt

There are 5 ways you can get rid of debt and lead a stress-free life. But what's important is that you choose the one that best fits your scenario.


* Interest rate arbitration: This is where you choose an independent third party who negotiates low interest rates with your creditors. So, you can consolidate multiple bills with one low monthly payment. This is also known as loan consolidation. The benefits are:
o Pay less each month
o One monthly payment instead of many
o Credit score improves
* Debt management: With this debt assistance program, you'll have the following benefits:
o Interest is reduced
o Late fees may be waived off
o Manage multiple debts with ease
* Debt settlement: This is where you have a settlement company/law firm working with your creditors to lower your payoff amount by 40-60%. With settlement, you have 2 major benefits:
o Creditors reduce interest
o They cut your principal balance
* Chapter 13 bankruptcy: It's an option with which you pay your creditors under court supervision. The benefits are:
o Creditors reduce interest on your debt
o They trim the principal debt balance
o You don't use your assets to pay off debt
* Chapter 7 bankruptcy: This is where you hand over your assets to a court-appointed trustee who sells them off and the sale proceeds are used to pay off debts. With Chapter 7 bankruptcy, you get the following benefits:
o Interest on your debt is lowered
o Principal balance is reduced

Jana,
Your are right on all of those. But they need to know the cons for each one. Right now the top 3 look great except there are cons with each one. Each one of those will affect your credit. "Interest Rate Arbitration and Debt Management" Will be reported to the credit agencies as a TPI (Third Party Intervention" and viewed as a little brother to BK and affect the credit report for 7-10 years. Debt Settlement will affect the credit report for the length of program your in. (You should never enter a program for more then 4 years. 3 years or less is ideal.) Also make sure the company you work with has attorney's that see your whole program out. Main question should be "If I get sued will you have an attorney REPRESENT me in court. Also make sure they negotiate what goes on your credit report. I.E. "paid to a sero balance. BK 13 will be 7-10 years, a majority of the people do not complete it due to if you miss one payment your out of BK 13 and you still have the ramifications. BK 7 is ideal and should be last option. Will affect for approx. 7 years and will dismiss your debt.

If you have any questions PM me or reply here.

Evo, a simple solution is to consolidate your credit cards into one loan. There are many companies that do this, even if you have defaults on your credit file. By not repaying your debts you are going to find it extremly hard to obtain finance in your future. Try a company like the Australian Lending Centre.

Evo,
I would stay away from consolidation companies especially if you are paying the company to make your payments. If it is an actual loan that you qualify for then ok. Since you have the means to pay it off the cards then it would be best just to get them done yourself. Leave the accounts open as well. If you close them it will only drop your credit score.

Evo...

I have a different way of looking at the problem and hopefully this may help you reach a decision.

Would you not agree that most people would go to great lengths to avoid paying taxes, or at the very least reduce they amount they pay? It's a necessary evil isn't it? So we do our best to minimize the impact. Some people just don't like government taking their income away, so they again do what they need to do to reduce the amount of taxes they pay.

Most people, however, don't view interest this way. In many cases interest will eat up just as much or more than taxes will over their lifetime.

If it costs you $300/month in finance charges (for hanging onto the debt) and you're only making about $200/month from your savings.. then it's COSTING $100/month to hang onto the debt.

So by paying off all your credit cards in one shot would give you an INSTANT raise in your monthly balance sheet.

So what if your savings drops down to $15,000 from $30,000. With no debt, you could EASILY build it back up again to $30k AND you'll be EARNING interest instead of paying it.

Even if all your interest rates were 0%.. paying them off and closing the accounts is the best thing you can do for yourself - security wise.

This leads me to my next point... the credit score.

I submit to you, if you own your home (or living in a house with a mortgage), then you do NOT NEED CREDIT anymore... Once you are in the house, the only thing having credit is good for is to get you MORE credit and more opportunity to get into debt. If you're not in a house yet... then you would STILL want to pay off all your cards, because the mortgage companies would not look favorably on all the open accounts. Whatever your credit score is..it is GOOD ENOUGH.

When you have NO DEBT, and CASH in the bank... the credit score does not even matter.

Sorry for the long post... but as you can tell... I get very passionate about this subject.

David