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How to avoid making a debt problem worse

Texas residents who are struggling to pay off debt are advised to create a repayment plan as soon as possible. They are also advised to overcome the urge to go deeper into debt on meals or other items that may provide temporary satisfaction. Part of a debt repayment plan should include making credit card and other payments on time. Cutting down on current expenses can be an effective way to pay off balances faster.

While becoming debt-free should be a priority, it shouldn't be a person's only priority. It is also important to put money aside to create an emergency fund. Having a cash reserve can prevent a person from putting emergency expenses on a credit card and going further into debt. Those who have existing credit card debt should analyze all the costs associated with a balance transfer.

In some cases, credit card companies charge a 3 to 5 percent transfer fee. If the balance isn't paid off by the time the zero percent introductory period ends, it could make it harder to pay down the remaining balance in the future. Furthermore, individuals should be wary about cashing checks that they receive in the mail and refrain from working with payday loan companies. This is because they charge interest rates as high as 400 percent on an annual basis.

Those who are in need of debt relief may find it by filing for bankruptcy. In most cases, debtors will receive an automatic stay of creditor contact. This means that a person will not receive phone calls or letters demanding payment until the case has been resolved. Debts such as medical bills, credit card balances and personal loans could be discharged in a Chapter 7 bankruptcy proceeding. An attorney can outline the eligibility requirements associated with this form of debt relief.

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