Overwhelming debt can make you feel frustrated and hopeless. Whether it is due to unemployment, health crisis, or bad spending habits, the feeling of not being to pay your debt can cause some stress, with consequences like finding it hard to relax or sleep at night. This is especially true if creditors and collection agencies are pressuring and pressing you to pay.
Debt relief attorneys at the Law Office of Davis & Jones, P.C. in Salt Lake City note that situations like these can cause you to take actions that are not in your best interest. Here some the things you shouldn’t do if you’re feeling overwhelmed by your debts:
Pulling money from retirement savings
Even if you’re desperate, it is never advisable to use your retirement savings to pay unsecured debt. That money has already its purpose, and that is to take care of you financially in the future. The same is also true for borrowing from workplace retirement accounts. This could spell disaster if you lose your job.
Borrowing against the equity of your home
While some people are using home equity loans to pay off their debts, it is best to proceed with caution. This can be risky, as you could lose your home in a foreclosure if you’re unable to make the payments. Although this can be useful in consolidating debts, it is not always the best choice. You might want to look for other ways to manage your debts, instead of putting your home equity on the line.
Skip paying secured debts
If you skip paying secured debts (like a car loan) to pay for unsecured debts (like credit card and hospital bills), you could end up losing the collateral, which is your vehicle.
Ruling out bankruptcy and other debt relief options
Bankruptcy may sound like a negative thing, but it could offer you some credit relief. Filing for it will trigger the automatic stay, which will prevent creditors from pressing you to pay your debts and repossessing properties. It is, of course, advisable to talk to bankruptcy lawyer first, before pursuing any strategy.
Don’t make your debts a lot more overwhelming. Consider the tips mentioned above and consult a professional to find out other ways in managing your debt.