The month of January brings the beginning of a new year, and many Ohio residents pledge to make significant changes to their lives in the months ahead. January also brings bills from the holiday season and, for some families, the sobering realization that their financial scenario is untenable. This leads to an important decision: is it time to make a concerted effort to repay debt, or is personal bankruptcy a better path toward eliminating debts?

Many families want to make every effort to repay their financial obligations, and view personal bankruptcy as a measure to be taken only after all else has failed. For those people, a structured debt repayment system is a good starting point. One method is known as the “snowball” approach, and is centered on the idea of paying off the account with the smallest overall balance first, then moving on to accounts with larger balances. This method can give consumers a sense of accomplishment, as well as momentum.

A different approach is called the “avalanche” method. This begins by looking at all accounts and ranking them in order of interest rate. The account with the highest rate is tackled first, and all available resources are put toward paying that balance off. Then the consumer moves to the next account on the list, and so on. This approach can save considerable costs in interest.

Consumers in Ohio and across the nation have had success using both of these methods of debt repayment. For some, however, no repayment plan will be enough to address a mountain of debt that has reached an insurmountable level. In such cases, personal bankruptcy may be the only means of eliminating your debts and moving on to a fresh financial start.

Source: abc10.com, “Two strategies for paying off holiday credit-card debt”, Gabrielle Karol, Jan. 8, 2016