Debt can make it difficult to lead a worry-free life. This makes it essential to create a plan to get things back on track when you’re falling behind. Constructing an efficient debt relief strategy is necessary to fight against accruing interest and avoid harming your financial future
While you’re considering the right things to do, you should also dedicate some thorough research into understanding what not to do as well. There are always clear things to avoid when you’re trying to get out of debt, and sometimes you may not even realize how important they are. Here are the top six actions to avoid when pursuing debt relief.
Using Up Savings
Using savings to pay off debt is almost always going to end up creating more debt. It may eliminate immediate debt, but, when you need savings in the future, more will likely appear as a result. You should not touch your savings unless you’ve budgeted funds out for a year in advance. Even in this case, caution is your friend as financial situations can change at any time.
Cashing Out on Investments
While stopping an investment is a safe way to reduce debt, cashing out on one is more harmful than beneficial. By halting an investment, the extra money remains available to pay off debt. Cashing out on an investment policy causes the money that was growing to disappear.
Spending the 401(k)
It is possible to borrow half of the money or a maximum of $50,000 from a large 401(k), but capital saved for retirement should be left alone. Eventually, borrowed money has to be paid back and all of the years spent building the 401(k) would’ve been wasted on debt before retirement which may ultimately result in you having to work long than intended.
Borrowing Against Life Insurance Policies
A policy with cash value may allow a person to borrow against it, but all this does is create a different debt that will need repaying.
Taking from Family or Friends
Borrowing money is unhealthy for most relationships All it takes for you to delay repayment by the slightest for a lifelong relationship to be ruined. It is best to keep money problems away from family and friends if you value the relationship you all share.
Borrowing Against Your Home
A collector can threaten to take property when you default on mortgage payments, but they cannot over credit card debt without a court order. Taking out a home equity loan to pay off credit card debt may settle your credit debt issues but it could ultimately lead to a foreclosure.
If you can’t seem to find a resolution to your consumer debt independently, you may need to explore your legal options. The Illinois credit card debt relief attorneys at Benveniste Law Offices can ‘provide you with debt relief options you may have not known were available to you. Heather Benveniste can implement proven effective negotiation strategies to help settle your credit card debt issues on the most favorable terms. Contact us at 1-800-497-5358for a free case evaluation.