Top 'debt mistakes' to avoid
Find out the top 8 mistakes to avoid when you are trying to pay off your debt. These are common mistakes that people might make. You may consolidate your debts to pay them off but be careful not to fall prey to scam companies.
There might be a natural tendency in each debtor to make some mistakes when in a debt that is quite taxing. However, if you can be made aware before time of the common mistakes individuals usually make while in a debt, you can avoid those and not get into further trouble.
Take a note of the 8 common mistakes made by debtors:
1. Getting into debt elimination scams: There might be scam companies who offer to eliminate your debt without analyzing your situation. Donít fall prey. These are scam companies.
2. Closing your credit card account: You may think this is the right step to take whereas to your creditors it will be a signal of you running away from debt because you cannot handle temptation or cannot control your habits. This is not a good sign that they get. If you think you need to live without credit it is better to shred your card rather than closing your account.
3. Going in for a high rate of interest: Look in to your credit card statements. Do not settle for a high rate of interest. If you think the interest rate is high, you can ask your creditors to offer you lower interests. Your creditor might not do everyone this favor buy if you have been a loyal customer and have made your payments regularly until now, you may expect a rate reduction. These companies would rather keep you as a customer than lose you to a competitor if you have been good.
4. Making minimum payments only: If you pay minimum each month remember you will be in debt longer than you would like to be. The longer you are in debt the more money you will be paying because companies will charge you high rates of interest. Make as much payment as you can each month and not the minimum. The sooner you get put of debt the better for your score.
5. Irregular payment of bills: Pay your bills on time to avoid being a defaulter. Maybe you think that you can pay once you are relaxed but this will only increase your burden. You might have to pay late fees and your creditor might also increase your rate of interest. Your credit score will also be affected if you are no regular on your payments for 30 days.
6. Avoiding contact with creditors: A very common mistake that one can make is to stop contacts with the creditor for fear of not being able to pay. When you see you cannot manage a payment, get in touch with your creditor. Make them aware of your situation and this way you may also be able to negotiate with them about payment.
7. Applying for home equity credit: Many individuals are known to have paid off their bills using proceeds from the home equity line of credit. Again if the credit cards got maxed out, there would be another loan against their homes to pay them off. These individuals would very soon be at the risk of losing their homes as the payments on their equity lines would grow to a level they would not be able to afford anymore.
8. Opting for teaser interest rate: You will definitely be tempted to see companies offering 0% interest for a period of 12 months. However, you must be aware that if you consistently move your credit from one company to another, you will find yourself o longer qualifying for the teaser rate with a fallen credit score.
Some also think that if you consolidate debt with the help of a professional agency, you are making a mistake. However, this cannot always be considered a mistake. If you are not being able to manage your debts and have difficulty paying off your bills professional help might be the solution. However, take care that you do not fall prey to any scam companies out there to get your money.
Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHOR
Jason Holmes is a reputed author and he has been writing articles on debt consolidation. He has also written for the Debt Consolidation Care community. Some of the articles written by him include Debt free, Consolidate debt, Debt negotiation, Bill consolidation, Ameriloan and Legacy Visa. His write ups are very informative and have proved to be very helpful to those in debt.