Risky Ways of Paying off Debts That Should Be Avoided

Posted on in Debt Relief

Illinois debt relief lawyerWhen you are behind in making payments on a loan or to a credit card company, you can expect to get calls from debt collection agencies. These agencies are required to follow state and federal laws prohibiting creditor harassment, but they will still employ high-pressure tactics in an effort to get you to pay off the debt. While going along with their demands may seem like the only way to prevent them from calling, there are certain circumstances under which paying off your debts may not be in your best interests.

Funds to Avoid Using as a Means for Paying Off Debts

In order to ‘help’ you get caught up on debts, credit collection agents may pressure you to use money from your savings, borrow from relatives, or take out a loan. When dealing with these companies, it is important to realize they make money on every account they settle, giving them a hidden financial motive in terms of any suggestions they make.

There are several shortcuts you want to avoid taking when it comes to paying off credit cards and loans. These include:

  • Depleting your emergency savings;
  • Taking from your retirement funds;
  • Borrowing against your home;
  • Taking out additional loans.

Any of these can make your situation significantly worse in the event you face additional financial problems, such as a job loss or suffering an injury that results in heavy medical costs. While you may have a relative or friend who is willing to lend you the money, this is generally a bad idea. Not only do you risk damaging your relationship, but it can increase the risks of financial problems for them as well.

Paying Off Debts that Have High Interest Rates

You particularly want to avoid doing anything that could jeopardize your ability to provide for your day to day expenses for the sake of paying on a high interest, unsecured credit card. According to recent surveys, even some of the most respected credit card companies out there have interest rates that go to well over 20 percent.

If you are having serious financial problems, these debts are likely to be last on your list in terms of making payments. Unsecured credit means there is no collateral for these companies to seize, and the debt can often be easily eliminated by filing for bankruptcy. Even some secured debts, such as car or furniture payments, may be better dealt with through the bankruptcy courts, particularly if the value of the property is significantly less than what you owe.

Reach Out to Us Today for Help

To get the professional legal guidance you need when struggling with debt problems, contact the Law Offices Of Eric G. Zelazny. We can arrange a free consultation for you to discuss your situation with a passionate Tinley Park bankruptcy and debt relief attorney who can outline the options that may be available. Before taking actions which could jeopardize your financial security now and in the future, call or contact us online and request a consultation today.

 

Sources:

http://www.bankrate.com/finance/credit-cards/6-risky-ways-to-pay-off-credit-card-debt-1.aspx

https://wallethub.com/best-credit-card-rates/

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