Misconception #12: That collector was so helpful and he must really like me.
The fact is that there are two basic techniques collectors use to get you to pay your bill. They pretend to be your friend or they are mean and nasty. They are not your friends. Credit card collectors will lie, chat, and steal to get your money. Any deal, special plan, or settlement you make with collectors must be in writing before you send them money. Otherwise, they can claim they never agreed to it. And never, ever give them access to your checking account or send postdated checks.
Misconception #13: It seems so easy to just file bankruptcy and start over.
I can certainly understand why bankruptcy is listed as one of the top five life-altering negative events. While it seems like an easy fix and you can start your life over the next day, in reality it can mess with your psyche for years. Having your financial life laid out so all can see is pretty dramatic and I wouldn't wish those feelings on anyone.
It can also follow you around for life. Chapter 7 Bankruptcy, which is total bankruptcy, stays on your credit report for ten years. Chapter 13 Bankruptcy is more like a payment plan, but still stays on your credit report for seven years. You may have noticed that most loan applications and many job applications also ask if you have ever filed for bankruptcy. Lying about this is technically considered criminal fraud.
Changing your habits, spending less than you make, and paying off your debits is a lot of work. But, when everything is said and done, you will be thankful you climbed the mountain instead of just blowing it up.
Misconception #14: It is dangerous to use cash because you might get robbed.
Crooks don't have X-ray vision to look into your purse or pocket. They probably assume it's just full of credit cards over the limit like everyone else. Look, there is a chance you may get robbed, whether you carry cash or not. We've covered this before. Get a Visa debit card and you're protected. All you have to do is call the bank, cancel it, and have another one issued.
You are sure to get robbed if you don't use cash. First, because of all the interest you are paying to the lenders. Second, because cash can get you better prices on purchases. And third, because you don't spend as much when using cash as you do when using credit cards.