Massive debt can feel impossible to escape at times. This can lead many people to fall into debt relief traps based on common debt relief myths. You do not have to let yourself fall into these financial traps by learning about and debunking these debt relief myths. Consulting with a Chattanooga bankruptcy attorney may also help you escape debt through bankruptcy.
Most Common Debt Relief Myths
Debt relief myths are almost everywhere. Believing in debt relief myths can lead to financial problems and traps that may worsen already existing debt. Avoid some of the most common debt relief myths by finding out what they are.
You may have heard about the most common debt relief myth, that making minimal payments on debt is enough. The reality is that this depends on the interest rate. Interest rates lower than 5% may not cause as many problems when minimal payments are made. However, higher interest rates can make your debt grow into an overwhelming amount.
Whereas making extra payments on debt each month to the principal balance can help you escape debt faster. At the same time, do not fall for the myth that paying off debts faster will repair your credit score right away. A credit score takes time to build and may not always be improved right away if there are past financial problems in your credit history.
Credit scores will also not improve by closing unused lines of credit, checking your credit report, or with credit repair services. In reality, credit repair services can only do as much as you can when it comes to repairing your credit score.
Avoid These Debt Relief Scams
Debt myths also come in the form of debt relief scams. Scammers will relay a variety of debt relief myths to you to convince you to pay them for their false services. Avoid common debt relief scams by recognizing common red flags like:
- Charging fees before providing debt relief
- Makes exaggerated promises
- Promises to erase debt ahead of time
- Claims unsecured debts can be paid off with a low investment
- Claims you can end debt collector calls and legal actions
What debt settlement companies claim they can do is erase your debt. However, what debt settlement companies actually do is attempt to negotiate with your creditors to reduce the debt you have to pay. There are risks like debt collectors filing lawsuits against you, late fees may still occur, and you may still have debt left.
What debt relief services should be doing is being transparent about their services. This means explaining the fees you may owe, the time needed to settle debts, risks and benefits, and your other options. Be wary about debt relief services that refuse to disclose these details.
Call Tom Bible Law Today
You may not have to deal with debt forever. Feel free to call us at Tom Bible Law today at (423) 424-3116 for a consultation about your financial options for escaping debt. Our experienced team of Tennessee bankruptcy lawyers might be able to help you take steps to improve your financial situation. We are located in the Tennessee cities of Chattanooga and Tullahoma.