Having a debt plan is mandatory if you wish to pay off your debts on time and achieve financial success. A debt plan will simplify the process of paying off your debt by outlining all the steps, payments that need to be made, deadlines, interest fees, and more. 

In simple words, a debt plan will provide you with the direction you need to move correctly. Thankfully, there are numerous debt plans available out there. Many of them are exceptionally effective. 

Let me highlight a few of the most effective ones here so that you know what options you have: 

The Debt Snowball 

The debt snowball is among the most popular debt plans. It is quite efficient for paying off multiple debts. It targets your debts in an ascending order where you pay the debt with the lowest balance first and then moves to the next lowest. 

The best thing about this debt plan is that it keeps you motivated by providing you with a sense of achievement now and then. Thus, it will take some time but you’ll effortlessly get through this desperate time.

The Debt Avalanche 

Another effective debt management strategy is the debt avalanche. In my personal experience, the debt avalanche method is better than the debt snowball method. The reason is, the debt snowball doesn’t care about the issue of interest rate. 

Most of the time, an insignificant amount nearly doubles because of the high-interest rate. Therefore, it isn’t something you can ignore and move on. The debt avalanche directs more money towards your debt with the highest interest rate while making minimum payments on others; hence, it’s more effective than the debt snowball.

Individual Voluntary Arrangement (IVA) 

Oftentimes, it’s your credit that makes paying off your debt more difficult. He bugs you here and there, putting unnecessary pressure on you. Not to mention, he doesn’t go by the decided time and rushes the situation. 

Such issues make it all more stressful. You can avoid all this by going with an individual voluntary arrangement. It’s a legal, binding agreement between you and your creditor where you buy time and your creditor cannot push you to pay more or less within the decided period. 

Debt Consolidation 

For those who cannot afford to pay off their debts because of a loss of a job or extreme financial crisis, debt consolidation is the best option. It involves taking a consolidation loan to pay off your debt all at once. 

Not to forget, it’s incredibly helpful for people who are burdened with interest fees. Yes, if your debt comes with a high-interest rate, you should consider taking a consolidation loan to pay it off. If anything, it will save you a considerable amount of money in the future. 

Bankruptcy 

If nothing else works and you find yourself in this mess where you don’t have a way out, you can discuss with your attorney and go for bankruptcy. Although it’s always the last resort, it’s beneficial for people who are struggling to make the ends meet. 

However, you must take everything into account before declaring bankruptcy as you may not be able to purchase anything via bank after that. Also, you won’t be able to get a credit card for quite some time, unless you’re back on your feet. 

Although all these debt management plans are amazing in what they do, I still suggest you hire a credit counselor or attorney before you choose one. I wish you good luck!