5 Things Not To Do During Debt Settlement

There is nothing as financially destabilizing as finding yourself in the grip of ever increasing debt.

Life often gets in the way of our plans to pay off our debts, and we become trapped in a debt spiral as our interest payments increase our debt to unmanageable levels. 

*** SPECIAL NOTE *** – If your credit cards, personal loans, or medical debts have become unmanageable and you owe over $20,000… then go here for debt relief. We can help!

Debt settlement is a strategy that enables debtors to pay a sum that is typically less than the amount you currently owe. This is done through third party agencies who negotiate on your behalf and guide you through the process.

If you are considering debt settlement, there are five things you should definitely keep in mind to ensure the process plays out smoothly and allows you to get your financial life back on track.

1. Don’t Close Cards With A Zero Balance

There are valid reasons to close a credit card like avoiding high annual fees, avoiding potential fraud, or if you’ve gone through a divorce or separation.

However, closing cards with a zero balance is typically a poor financial decision for several reasons.

First, your credit utilization will go up.

Your credit utilization ratio is determined by how much of your total available credit you’re using. When you close a credit card with a zero balance, you’re increasing your utilization percentage by reducing the amount of available credit from the ratio.

Second, having a long history of good credit helps build your score, so if you cancel an old line of credit, your credit score may take a hit.

2. Don’t Apply For New Credit Cards

Applying for a new credit card can negatively impact your credit score by reducing the overall average age of your credit accounts.

Furthermore, simply submitting an application for a new credit card can hurt your score, and credit card churning, which is the act of frequently opening and closing credit accounts to take advantage of promotions and discounts, can be particularly devastating to your credit score.

In short, you shouldn’t increase your debt with new credit cards while you are trying to settle the debt that you already owe.

3. Don’t Stress Over Your Creditworthiness

Your creditworthiness helps lenders determine the likelihood that you will default on your debt.

While these tips can help mitigate any negative impacts to your credit score, it’s important to remember that you need to eliminate the debt you have now before you start worrying too much about improving your creditworthiness.

4. Don’t Skip Monthly Deposits

When you participate in a debt settlement program, you are hiring a third party to negotiate with your creditors to settle your debt for less than its current value.

With debt settlement programs, you typically make monthly deposits that go toward paying off your debt.

If you skip paying these monthly deposits, you may be removed from the program. Debt settlement only works if you consistently make your monthly payments.

5. Don’t Withdraw From The Program Early

It is possible to withdraw from a debt settlement program early, but it is ill advised.

You will still need a plan to pay your debt, only now you won’t have a partner to deal with your creditors, negotiate a lower debt payment, and guide you through the process.

The most important factor in debt settlement is the third party debt relief agency you choose to work with.

At Americor, we understand the unique financial challenges people are facing today.

As America’s trusted source for debt relief solutions, we aim to empower you with financial knowledge that can lead to informed decisions, whether it’s about savings, investments, or managing debt.

If your debt has become unmanageable and you have difficulty making your debt payments each month, then you should consider a FREE consultation call with one of our certified Debt Consultants, who can provide personalized debt relief advice tailored to your specific needs.

By taking proactive steps today, you can put an end to your financial stress and work towards a brighter financial future. 

Remember, there is always hope for debt relief, and our team of experienced professionals are ready to guide you on your journey to regaining control of your finances.

For more information on Americor’s debt relief services, contact us today to see how we can help you eliminate your debts, and get on the fast-track to becoming completely debt-free!