Dear Liz: My finances have been on the rocks for six years. I have a defaulted student loan, credit card debt, bounce fees from checking account overdrafts and money owed for utilities. I'm a single mom and recently moved back in with my parents. I finally saved enough money to buy a car with cash, because whoever looks up my credit laughs. It's so bad, I wouldn't give myself a loan.I finally feel like I'm in a position to start paying down all this debt; however, when I look at it I get anxious because I don't know where to start. I want to get an apartment within in the next year, and I know my credit will have a major impact on my ability to get a decent place. How should I prioritize my debt when it has all gone to collections?
Answer: You got yourself in a muddle, all right, but the fact that you could save cash for a car bodes well for your future. If you have the discipline to do that, you have the discipline to fix your finances.
Your defaulted student loan probably should be your priority. Student loan debt typically can't be erased in bankruptcy, and collectors of this debt have the power to garnish your wages and seize your tax refunds. Continue reading
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