If you feel like you're in over your head with personal debt, you're not alone. Millions of Americans have become overextended, many as a result of easy credit and the recessions. Credit cards, medical bills, personal loans and raising interest rates do not make a good financial mix.
The 5 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:
1. Beware of just paying the minimum payments on your debts. This will results in your overall debt actually growing and your problems will only become worse.
2. Beware of relying on friends and family as it could damage relationships with the most important people in your life.
3. Beware of unscrupulous credit counselors that demand cash upfront or high fees for help they promise, but don't deliver.
4. Avoid taking out a new high-interest loan to pay off lower interest rate loans. It may be easier to just have one payment but it will actually increase the amount you have to pay back.
5. Declaring bankruptcy when debt settlement may work for you...
Debt Settlement or Bankruptcy
Two common solutions people turn to are debt settlement and bankruptcy. Generally, if you are struggling with a financial hardship and are behind or falling behind on your minimum payments, then debt settlement may be right for you. If your situation is more dire, then you may consider bankruptcy.
However, bankruptcy is a serious step with long term implications for you and your financial future. Most experts would suggest it only as a last resort. The better course is to attempt to work through your debt issue with your creditors and this is where debt settlement companies can help.
What is Debt Settlement?
You may have heard companies advertising recently that they can get much of your debt eliminated. Is this process legitimate?
Working with a Debt Settlement company can actually be a great solution for many people struggling with a financial hardship. Debt settlement is the process of negotiating with your creditors to get them to forgive a potion of your debt. Specialty settlement companies determine a reasonable monthly amount that you can afford to pay, which is based on total amount owed. You make your affordable payment every month into a special purpose account, and as these funds accumulate, the settlement company reaches out to creditors to negotiate a final actual settlement amount. Typically these companies have excellent relationships with creditors and are negotiating on behalf of thousands of people every day.
Every situation is different, but it is not uncommon for debt settlement companies to be able to negotiate a reduction that of as much as 50% of what you owe.
So, how to find a legitimate and trustworthy debt settlement company to work with? A great way to start is by visiting Freedom Debt Relief for a free, no-obligation consultation to evaluate your options.
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