Debt Management & Payoff

A debt payoff strategy where you pay your debts from the smallest balance up to the largest, regardless of interest rates. You make minimum payments on everything except the smallest debt, then put every spare dollar toward that one, rolling its freed-up payment into the next debt once it’s cleared. It relies on the motivation of quick wins rather than interest math, which is what sets it apart from the avalanche method.

A debt repayment strategy that prioritizes paying off your debts with the highest interest rates first. You make minimum payments on all debts except the highest-interest one, put any extra money toward that debt, then roll those payments into the next highest-rate debt once it’s cleared. Unlike the snowball method, it minimizes total interest paid over time, though progress can feel slow at first.

A financial strategy that combines multiple debts, such as credit cards, personal loans, and medical bills, into a single loan with one monthly payment, ideally at a lower interest rate. It typically involves taking out a new loan (or a balance transfer card, home equity loan, or HELOC) to pay off your existing debts. It only helps if you can secure a lower rate and avoid running up new debt afterward.

A debt relief strategy in which a borrower, or a company negotiating on their behalf, tries to convince a creditor to accept less than the full balance as payment in full. It is usually used for unsecured debt like credit card balances, medical bills, or collection accounts, and creditors aren’t required to agree. Generally considered a last-resort option for people already in severe financial hardship, since it can seriously damage credit and carries no guarantee of success.

A federal legal process designed to help individuals or businesses deal with debts they can’t repay. For individuals, the most common options are Chapter 7, often described as liquidation, and Chapter 13, a court-approved repayment plan. Filing can trigger an automatic stay that stops most collection actions, though it damages your credit for years and does not discharge every type of debt.

Money owed for healthcare services that haven’t been fully paid, arising from hospital bills, emergency visits, lab work, surgeries, prescriptions, and similar care. Unlike most consumer debt, it usually isn’t tied to a planned purchase but appears after an unavoidable or urgent health event, often when insurance covers less than expected. It can take several forms, from an unpaid bill owed directly to a provider to a balance sent to collections, each with different financial consequences.