Quick Reference
Key Information at a Glance
Payoff Strategies
| Strategy | Order | Best For |
|---|
| Avalanche | Highest interest first | Math optimizers, saving money |
| Snowball | Lowest balance first | Quick wins, motivation |
| Hybrid | Start snowball, switch to avalanche | Best of both |
Debt Payoff Checklist
What's Negotiable
| Item | Likelihood | When to Try |
|---|
| Credit card APR | Medium-High | Good standing |
| Late fees | High | First offense |
| Annual fees | Medium | Long customer |
| Hardship programs | High | Documented hardship |
| Medical bills | Very High | Before or after |
| Collections settlement | High | Account already in collections |
Settlement Ranges
| Account Status | Typical Settlement |
|---|
| Recent collections | 40-60% |
| Older collections | 25-40% |
| Lawsuit threat | Varies |
| Very old debt | 10-25% |
Debt Validation Rights
- Request validation within 30 days of first contact
- Collector must prove you owe the debt
- Collection must stop until validation provided
- Keep everything in writing
Your FDCPA Rights
Collectors CANNOT:
- Call before 8 AM or after 9 PM
- Contact you at work (if you say not to)
- Harass or threaten
- Lie about amounts
- Contact after cease request (written)
Emergency Fund Targets
| Level | Amount |
|---|
| Starter | $1,000 |
| Basic | 1 month expenses |
| Solid | 3 months expenses |
| Secure | 6 months expenses |
Credit Score Impact Timeline
| Item | Years on Report |
|---|
| Late payments | 7 years |
| Collections | 7 years |
| Charge-offs | 7 years |
| Chapter 13 | 7 years |
| Chapter 7 | 10 years |
Credit Score Factors
| Factor | Weight |
|---|
| Payment history | 35% |
| Credit utilization | 30% |
| Length of history | 15% |
| Credit mix | 10% |
| New credit | 10% |
Consolidation Options
| Option | Best For | Caution |
|---|
| Balance transfer | Good credit, can pay in 0% period | Fees, regular APR after |
| Personal loan | Fair+ credit, fixed payoff | Rate depends on credit |
| Debt management plan | Multiple creditors, need help | Accounts closed |
| Home equity | Large amounts, own home | Risking home |
Bankruptcy Basics
| Chapter 7 | Chapter 13 |
|---|
| 3-4 months | 3-5 years |
| Assets may be sold | Keep assets |
| Must pass means test | Need regular income |
| 10 years on credit | 7 years on credit |
Key Formulas
Debt-to-Income Ratio:
Monthly debt payments ÷ Monthly gross income = DTI%
Interest Rate to Monthly:
APR ÷ 12 = Monthly rate
Monthly Interest Cost:
Balance × (APR ÷ 12) = Monthly interest
Keep this reference handy during your debt-free journey.