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5 Frightening Paths That Can Lead To Damaging Debt

Stress over credit card's billDo you watch a lot of scary movies like Halloween II, II or III? Or maybe those Nightmare on Elm Street films? While you might be frightened by these movies, there are financial things that could happen to you that would be even more terrifying. These are things that could leave you and your family hurting for money or even penniless. What is the top five of these horrible paths?

The nasty effects of identity theft

How about this for a horrible scenario? You receive a harassing phone call from a debt collector about a debt that you never owed or see your car being repossessed or your cell phone service turned off because of a “delinquency.” Or even worse, you miss out on a potential job because the employer does a background check and finds that there is a warrant for your arrest for a crime you never committed.

If you think this can’t happen to you, think again. There was a survey done recently that revealed the fact that there were more than 12 million victims of identity fraud here in the US just in the year 2012. This equates to about one victim every three seconds. And the most damaging thing involved Social Security numbers.
How can you prevent this from happening to you? Be sure to protect your personal information. Don’t leave credit cards, your Social Security card or monthly bills lying around the house or in your wallet. Keep them someplace safe. When you get applications for credit cards or if you have cards you no longer need, shred them. In the event you are victimized by identity theft, contact your creditors immediately. And be sure to notify all three of the credit reporting bureaus – Experian, Equifax and TransUnion.

Hackers and scammers

You could be victimized by scams that range from sophisticated online thievery to phony charities. Their objective will be to get your credit card number. When it comes to donating money to a charity, your heart could be in the right place. But do your homework so that you won’t be scammed. Whether you’re solicited by phone or via your front door, research the charity first to make sure it’s a legitimate and reputable organization. Even more threatening are online scams. The creepiest of these is what’s called keystroke-logging malware that steals your personal information off your computer or other electronic devices. Malware can be unwittingly downloaded when you click on tainted websites, emails or links. Your information then goes to the identity thief who uses it to empty your accounts, open credit cards or even get loans in your name.

There are many other types of scams you need to watch out for and here’s a video that reveals 25 of the most popular.

The nightmare of co-signing

If you find yourself tempted to cosign for a loan with a family member or friend, make sure you understand it could turn out to be a nightmare if the person does not make good on the loan. You may not realize this but when you cosign for someone and he or she defaults on the loan, you will be responsible for repaying the debt. This can put your own credibility, finances and credit standing in danger. This may not only increase your debt but if you can’t pay back the money, you could see your bank account frozen, your credit score lowered or even your wages garnished. If you do decide to cosign on a loan, be sure to set ground rules about repayment so you can be confident that the person will do the right thing and make timely payments. If not, you will not only end up with more bills but with a ruined relationship as well.

Helpers from hell

These are people who arrive at your most defenseless moments like after the death of a spouse or divorce. Unfortunately, these people are not helpers at all. They are con artists with a scheme that works like this. A kindly and charming stranger approaches you after you were just divorced or widowed. This person offers ideas that are designed to help you overcome your grief and resolve your financial worries. The con artist showers you with attention when you are at your most vulnerable point. The con artist eventually says that he or she has run into financial problems and you feel obliged to help even though this may jeopardize your own financial situation. If you’re not careful, the person will gain more control of your finances as he or she moves closer to you.

You could be the most horrifying monsterSurviving Debt Despite Unemployment

You should not only stay on the alert for what other people can do to your life but also what you can do yourself. If you’re not careful you may be guilty of doing things that are slowly draining the money from your finances like some kind of a fiscal vampire. As an example of this, you may be paying fees from your bank that you don’t even realize. Numerous banks offer free checking and savings accounts but with conditions. You must keep a minimum amount of money in the account or make regular direct deposits. If not, you will be charged fees. If you are unaware of this, you could very quickly rack up a lot of fees without even knowing it. Another way to drain the lifeblood from your finances is by taking out too many credit cards. If you have multiple credit cards and you lose track of your statements, you could miss a payment or find yourself burdened with too much debt. The solution? Carefully monitor your credit card statements. And if you do have multiple credit cards that have varying due dates, you might call each credit card company and get your due dates changed so that they would all hit on the same day. This can help lower the risk of missing bills and payments, which you don’t want to happen as this could ultimately have a dire effect on your credit score.

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