Mistakes You Should Dodge When Seeking Debt Relief

Falling into serious debt can make you feel stressed and overwhelmed. You may feel like you’re working harder and harder, but you aren’t getting anywhere. You can start to feel like you’ll never see the end of your debt, which can make you feel desperate.

When you’re desperate, you’re in the worst place you can be. You won’t think clearly, and you’ll be more likely to make bad decisions – the kind of decisions that can make your situation even worse.

Even if you don’t know what to do to get out of debt, you can do a lot to help yourself just by knowing what not to do. Here are a few of the mistakes you should try to dodge when you are trying to find debt relief:

Empty Wallet

Prioritize Unsecured Debt

Credit cards carry ridiculous interest rates, which causes their balances to go up fast. When you owe a lot of money to credit cards, it can feel like you aren’t making a dent in your balance because of the interest. So, you might start putting as much money as you can to paying them off.

However, doing so is a big mistake. Funneling all your money to your credit cards means you have less money to pay for other things. That means that you might need to take out more credit card debt just to pay for your essentials. It also means that you might not have enough money to pay for your secured debts, such as your home or auto loan. If you fall behind on these secured debts, your lenders can actually come for what you have, such as foreclosing on your home or repossessing your car. Your problems will be exponentially worse if you don’t have a car to drive or a place to live.

Always prioritize your secured debt payments over your unsecured debt payments. Unsecured creditors typically don’t have much recourse other than to harass you until you can’t take it anymore and pay off.

Taking Out Loans

When you don’t have the money to pay your creditors, you may look for other ways to pay, such as by asking friends for money or by taking out a loan. You may think that you just “need a little help” until the next paycheck, or until you get that raise you expect, or until you get that better job.

The trouble with this strategy is that you can’t count on any of those things happening. You have to learn how to better manage the money you have right now. Taking out a loan will only compound your debt problem. Unsecured loans like payday loans have excessive interest rates and fees, and they will drive up your debt fast. Just avoid taking on more debt and look for other forms of debt relief.

Give in to Creditor Pressure

The calls may never seem to end when you owe money to creditors. You will start to feel like you’ll do anything just to get the harassment to end. You may give in and just offer everything you have to the creditor who is harassing you the most. But then you don’t have money to pay your other creditors, and another debt may have been more pressing.

It’s important that you assess your debt objectively so that you can make a strategic plan that will benefit you the most. You can do that if you make decisions in the spur of the moment because of pressure from a creditor.

Don’t make any of these mistakes when you are trying to get a handle on your debt. Instead, talk to professionals like a financial counselor or an attorney to learn about the best strategies. In many cases, filing for bankruptcy can bring you maximum debt relief, allowing you to get the fresh start you need more quickly.

If you are mired in debt, call My AZ Lawyers to learn how filing for bankruptcy may be able to help you. If you qualify, filing for Chapter 7 bankruptcy may result in a discharge of all your unsecured debts, or filing for Chapter 13 may put you on a more affordable repayment plan so you can pay your debts and get control of your finances. Call our bankruptcy law office today to review your finances and explore your options for debt relief.

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