One of the problems about being seriously in debt is that it’s easy to become confused about how much you owe to which company and when your payments are due. And when you get confused, it’s very easy to do things that you might later regret. While there are many mistakes you could make when struggling to keep up with your debts, there are five common ones to avoid.
One of the biggest mistakes you can make about your debts is to try to ignore them. Acting like an ostrich and sticking your head in the sand just leads to higher bills because late fees will keep coming and your interest charges will just keep getting bigger. This means you can end up at a higher risk for being sued, seeing your car repossessed, being evicted or losing your home or having your utilities shut off. It may hurt but you absolutely must open those bills and return calls from your creditors.
Stay current on your car loan
It’s very important to do everything you can to stay current on your car loan or you could see it repossessed. You can actually have your car repossessed if you miss just a single payment and without any warning whatsoever. If you need that car in your job, losing it could be an unmitigated disaster. Even if you don’t need your car to earn a living, losing it could make life a lot more difficult for both you and your family.
Don’t pay just the aggressive creditors
It might be tempting to pay those creditors who harass you the most, but this could be a mistake. A better answer is to decide which creditors to pay based on the consequences of not keeping up with those debts. In other words, the harsher the consequences, the more critical it is that you pay that debt. As an example of this, if you don’t pay your mortgage, your lender can foreclose on your house and throw you out. Or you could have your car repossessed if you don’t pay on your car loan.
Never make promises you can’t keep
Never agree to pay more than you truly believe you can afford to pay when talking with a creditor about past-due payments or how you intend to stay current on future payments. What you promise should be based on your household budget. And don’t give creditors post-dated checks. There is nothing that prevents a creditor from depositing that check the day it receives it, which could cause the check to bounce. In the event this happens, you’ll have to pay a fee to the creditor and an insufficient funds fee to the bank. For that matter, if you can’t cover the check, you could be prosecuted for passing a bad check.
Steer clear of high-risk loans
There are what are called “non traditional” lenders that will want to loan you money, telling you that this is the best way out of your financial problem. Steer clear of loan offers made by these lenders, especially if the loan requires you to use your home, car or some other asset as collateral. Nontraditional lenders may offer you a loan that sounds very good, but watch out. You may find when you read the paperwork, the loan would be a very expensive source of cash or that the terms of the loan could actually set you up to lose your collateral.
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