Strategies to Avoid when Dealing with Debt

When dealing with a debt problem many people's first priority is to avoid declaring personal bankruptcy. As a result, they may jump at the first solution that comes their way. But some of these strategies can actually hurt you.

Here are five common approaches that you may want to avoid:

1. Only Paying Credit Card Minimum Monthly Payments

Paying the minimum on your credit card bill seems like a smart move for getting some relief but the way that interest is usually calculated, it actually means that your total debt amount will grow over time. Therefore, making minimum payments often makes the problem worse, not better.

2. Seeking Debt Relief from Friends or Family

Taking a loan from friends or family may sound like a great idea. But using a friend or a family member as your debt relief solution can lead to severely strained relationships. If there's no legal agreement, you may not feel the same pressure to pay it back, and your important relationships could easily be damaged if the other person doesn't get paid back as they feel they should.

3. Paying Off Debt with a High Interest Loan

While it may make sense to pay off all of your creditors and only have one monthly payment obligation, you always need to look at the fine print of the loan terms. Chances are the new loan may have a higher interest rate than your current average, so you will actually end up with more debt than you are carrying.

4. Credit Counselors with High Fees

Credit counselors can help you manage your debt, so you don't want to necessarily rule them out entirely. But, if a credit counselor asks for a high fee or asks you to pay upfront, be very wary as some unscrupulous credit counselors prey on people who are vulnerable because of their debt situation, and take people's money without actually helping.

5. Bankruptcy as a Debt Solution

Bankruptcy may be a viable debt relief solution, but it should really be your last resort. While it can erase some of your debt, it can't always relieve you from all of it. You could lose your car, your home, as well as other property in the process and it will hurt your credit report for years to come.

So, What To Do...

If you're burdened with seemingly insurmountable debt, it's important that you realize that help is available. Millions of people are having similar problems and are working through them successfully.

One of the best options that many people turn to is a service called Freedom Debt Relief, one of the nation's premier settlement agencies.

Debt settlement agencies negotiate with your creditors to reduce credit card debt, medical bills, and unsecured personal loans. They determine a reasonable monthly amount that you can afford to pay, and then negotiate with your creditors to get you a settlement and help you avoid bankruptcy.

In some cases, Freedom Debt Relief can negotiate a debt reduction of as much as 50%.

Freedom Debt Relief is currently offering free consultations. Their experts will help you explore your debt relief options and suggest a solution that could work for you.