Top 5 Mistakes to Avoid When Seeking Debt Relief

Exploring debt relief can be confusing. Avoid these common mistakes to protect your finances and make informed choices.

1) Paying Large Upfront Fees

Be wary of programs that require substantial upfront payments or guarantee specific outcomes. Reputable firms clearly disclose fees and do not promise results.

2) Ignoring the Total Cost of Debt

Focus on interest rates, fees, and the time it will take to resolve accounts. Compare the total cost across options, including consolidation, DMPs, and settlement.

3) Not Verifying Credentials

Check for licensing where applicable, read contracts carefully, and look for clear disclosures. Ask questions until you understand the process and risks.

4) Stopping Payments Without a Plan

Pausing payments can increase interest and fees and may lead to collections. If that’s part of a strategy, ensure you understand the risks and alternatives.

5) Overlooking Safer Alternatives

• Talk to a nonprofit credit counselor about DMPs and budgeting support.
• Consider consolidation loans if you qualify at a reasonable rate.
• Evaluate DIY payoff strategies (snowball or avalanche).

Trusted Resources

• CFPB: Debt Collection Resources
• FTC: Debt Relief and Credit Repair Scams

Disclaimer: This content is for informational purposes only and does not constitute financial or legal advice.