The 5 Dumbest Things You Can Do if You Have too Much Debt

The 5 Dumbest Things You Can Do if You Have too Much Debt

If you’re struggling with too much debt, you’re not alone.  It seems as if the whole nation has a borrowing hangover.  For years, credit was easy, and many people became overextended.  But, we now live in an era of austerity and it’s time to get our affairs in order.
The five strategies you may want to avoid:
The first piece of advice from experts in the financial field is to be sure you don't make your situation worse by making common mistakes.  In particular, try to avoid:
1. Paying only the minimum payment on your debt, as this will result in the amount you owe actually growing, and your problems will only become worse.
2. Relying on friends and family, as this can damage relationships with the most important people in your life.
3. Unscrupulous credit counselors that demand cash upfront or high fees for help they promise, but don't deliver.
4. Using new, high-interest loans to pay off lower interest rate loans. While it may be easier to just have one payment, it will actually increase the amount you have to pay back.
5. Declaring bankruptcy--this can have permanent and severe consequences on your financial future. Avoid it if you can, especially when debt settlement may work for you.

Debt Settlement

For many people, working with a debt settlement company can actually be a great solution.  You’ve probably heard a lot of advertising for these services recently, but what exactly do they do?
Debt settlement is the process of negotiating with creditors to get them to forgive a big portion of your debt.  Why would a credit card company do this? Well, it’s not out of the generosity of their heart. They have made the financial calculations and determined they are better off knowing for certain that they’ll get paid something, rather than not knowing if they will get paid anything.
Settlement companies work with individual consumers to determine a reasonable, monthly amount that they can afford to pay against their debt load.  The individual makes the affordable payment every month into a special-purpose account, and as these funds accumulate, the settlement company reaches out to creditors to negotiate a full and final actual settlement amount that they will take. The debt settlement company only charges a fee after they have achieved a satisfactory settlement for you.

Typically, these companies have excellent relationships with creditors and are negotiating on behalf of thousands of people every day.  The amount of savings they can obtain for consumers can be significant.