Experts warn against making your debt problems worse due to these common mistakes:
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 high fees for help they promise, but don’t deliver.
4. Using new high-interest loans 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. This can have permanent and severe consequences on your financial future. Avoid it if you can, especially when debt settlement may work for you.
For many people, working with a debt settlement company can actually be a great solution. These companies negotiate with creditors to get them to forgive a big portion of your unsecured debt. Creditors often agree because they’re better off being paid something for certain, rather than not knowing if they will get paid anything at all.
While each situation is different, it’s not uncommon for debt settlement companies to negotiate reductions of as much as 50 percent of the outstanding amount and help get their customer debt free in just a few years.
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