FIVE WORST THINGS YOU CAN DO IF YOU HAVE DEBT

Do you have a significant amount of debt? Make sure you are not making decisions that will get you deeper into the hole. Find out what the worst things you can do are here!

How Life Works shares…

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 advice of experts in the field is to be sure you don’t make your situation worse by making common mistakes.  In particular try to avoid:

• 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.
• Relying on friends and family, as this can damage relationships with the most important people in your life.
• Unscrupulous credit counselors that demand cash upfront, or high fees for help they promise, but don’t deliver.
• 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.
• Declaring bankruptcy – avoid if you can, especially when debt settlement may work for you…

Debt Settlement

For many people, working with a debt consolidation 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 unsecured debt. Unsecured debt includes credit cards and medical bills, but does not include mortgages, auto loans, student debt and taxes.

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 at all if they will get paid anything.

Consolidation 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 consolidation company reaches out to creditors to negotiate a full and final actual settlement amount that they will take.

Get more information from How Life Works!