When it comes to resolving debt, there is always plenty of well-meaning advice. Unfortunately, those making the suggestions will likely never have to face the consequences of a wrong decision.
As one U.S. News article points out, the good news is that credit card debt is unsecured. That this debt is unsecured will prevent the credit card company from seizing your car or your home. However, credit card debt could still stop you from having the money available to make car or house payments.
Creditors do understand that the cost of collecting debt can be enormous, so they are sometimes willing to negotiate. However, simply reducing the amount of debt does not mean that your problems are over.
It is important to remember that a credit card company will put its own interests first. They will reduce the amount you owe only after they feel it first meets their own best interests.
Examples of bad advice
Those in debt will generally wish to get rid of it as soon as possible. But in doing so, they may take steps that will only make their circumstances worse. Examples of such mistakes include:
- Making a deal with a debt settlement company. Using a debt settlement company as a go-between does not mean that your dealings with the creditor are over. It may instead result in having to pay one more party for their services. Also, not all debt service companies are ethical. While charging customers without successfully reducing debt practice violates Federal Trade Commission rules, this practice does occur among certain debt settlement companies.
- Stopping making payments to creditors. Without a bankruptcy filing in place, this could lead to paying more in interest and penalties. So long as the debt remains in existence, the creditor may also continue reporting those in debt to various credit bureaus.
- Believing in promises that are too good to be true. Many debt settlement companies provide bogus guarantees. Out of a desire to eliminate debt, those in debt are unfortunately vulnerable to such assurances.
When facing insurmountable debt, it’s important to understand all of your legal options. One such option includes the possible elimination of your debt through personal bankruptcy. It’s important that the steps you take will make your debt more manageable and possibly even eliminate it.