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Now more than ever, the problems of rampant credit card debt are coming to the fore of our national culture. Against a backdrop of declining real estate values, unemployment reaching 1970 levels, and Wall Street in complete disarray, the relentless accumulation of consumer debt by entire American citizens has become a drain on the American economy and has strained personal finances. pulling down. Almost every one of our countrymen. Households are now completely dependent on credit cards for even the simplest purchases now that destructive purchasing habits have plagued our economy and negative spending is the order of the day. Furthermore, consumers have become so used to dealing with their debt as a constant – credit cards are somewhere between death and taxes on the list of modern essentials – that they often see no way out of their predicament. Are. In this article, we just want to give some tips to troubled borrowers on how best to start the process of debt management to wipe out their credit card balances once and for all.
Like any emergency, the first step should be the most obvious – don’t panic. There are certainly reasons to be concerned, especially for families who are already in dire straits with their financial obligations. It’s understandable that borrowers who have started taking cash advances to pay off their other cards (and sometimes still can’t make the payments) must be wondering helplessly what can be done. The nature of credit cards, with credit now so available despite very low FICO scores and regularly being offered additional accounts even after other cards have maxed out, shoppers have the worst instincts, and before that Be aware, individuals and families can even hold their grandchildren responsible for the debt burden continuing unabated. However, breaking the chain of credit card debt is easier than you think. Once again, though, this type of permanent debt relief requires a steady hand and reasoned deliberation regardless of the pressures on you and your family.
The greatest immediate stress, of course, comes from the incessant harassment of debt collectors ringing the phone hourly demanding full repayment of outstanding bills (how frankly impossible such a scenario would be). For particularly unlucky borrowers, collection agencies call so often and send so many threatening notices that debtors take the phone off the hook and simply throw away their mail. This is the wrong way. This is nothing more than a feeble submission to the forces of credit card debt. Legislation has been passed in recent years that gives unscrupulous borrowers a greater advantage when dealing with unscrupulous bill collectors, regardless of how much the borrower owes. When a debt collection agency rings your phone, answer and explain with businesslike grace that you are dealing with your situation and will work out a payment plan soon, but, until things are firmly settled By then, you’ll appreciate the end of the loan. telephone harassment. Talk to the manager if necessary. By simply notifying the collection agent that you do not wish to receive calls, they are bound by law to avoid any further contact. Also, take down their information and send a letter — keeping a copy for your own records — reiterating that you want an end to all correspondence. If they continue to harass you at home (or, even better for these purposes, at work), you can take the collectors to court!
Of course, just because you’ve successfully ended the phone call doesn’t mean that creditors will suddenly forget about the debts you owe. The next thing to do would be to call customer service for each one of your loans – even the ones that are still in good standing – and request to speak with a representative who is one step up the corporate ladder. Be able to assist you with your plans. For debt relief. Credit card companies don’t want to lose a customer, as you can imagine, and they certainly want to know that their customers still intend to pay back their existing debts. To that end, most lenders will actively help with temporarily lower interest rates (often up to thirty percent), some over-limit or past due fees and charges that may have accumulated over the years, and, almost certainly, forgiveness. When they are truly confident that you are in the process of getting your finances in order, work out a more favorable payment schedule. If payments were late or unpaid because of a real disaster – whether it was unexpected unemployment or a family tragedy or even illness and hospitalization – they would certainly be more willing to bend corporate rules and compensate for the missed payments. Can also overlook: It’s not that they forgive money but they sometimes forget to send proof to the three credit bureaus that effectively determine your FICO score and credit rating. Remember, the worst thing that could happen to lenders would be a declaration of Chapter 7 bankruptcy (although, as we’ll discuss later, this threat holds less and less water) or a simple abandonment of payments altogether that credit card companies have to pay. Will force you to discharge the debt for tax break purposes. Both options are disastrous enough for the borrower, but they are frequent enough nonetheless that credit card conglomerates will do whatever they can to prevent any chance of this happening.
However borrowers should avoid any possibility of actual loan default. While the companies themselves may be able to obtain substantial tax breaks for their presumed losses, they still retain legal ownership of the debts and can place liens on debtors or take them to the courts at any time. Similarly, bankruptcy protection, as it is regularly portrayed in the media as an answer to the prayers of a desperate borrower, has been severely deregulated by recent changes to the United States Bankruptcy Code and is no longer available to those debtors. makes no guarantee for those still gainfully employed. Using something called a means test provided by the Internal Revenue Service, courts now send most debtors seeking Chapter 7 debt elimination bankruptcy protection into a Chapter 13 debt restructuring program. The federal government and one, although the credit card will be paid by law penalties, do not seem worth the expense of bankruptcy attorneys. With both, the impact on the FICO score and credit rating cannot be underestimated. By declaring bankruptcy or defaulting on a loan, you are not only giving up credit opportunities, you are also giving up access to homes, vehicles, and even, these days, employment for nearly a decade of your life. Even the possibility of Credit card debt must be dealt with, but better solutions are available.
Different, but equally worrying, concerns should come up about debt consolidation options so often these days. Most of these options are only available to homeowners, whether by refinancing a first mortgage or taking out a second mortgage at significantly higher interest rates (though they should still be well below those offered by credit cards), and There are two problems that all home owners must consider. The nature of the former is more perceptual. Although credit card debt will be largely absorbed into home equity by these types of loans, leaving the original accounts open and untouched, it does nothing to change the spending behaviors that lead to these problems in the first place. gone, and many borrowers faced it. Suddenly the open cards fall back into their old habits and shop recklessly as before. In fact, with terms unnaturally extended to twenty or thirty years, they can barely pay attention to equity loan payments, although they will pay back many times the original balance before all is said and done. More worryingly, the economy and property values continue to decline in such a dire situation, so maintaining equity should be a priority for every homeowner. After all, the average American’s largest investment is their primary residence, and they need to make sure that equity is present in case of some potential troubles later on. If the real estate market continues to falter (based on major financial troubles from the failure of so many subprime mortgage lenders), many borrowers could find themselves with negative equity when they need it most.
There are other options that should be avoided. Consumer credit counseling companies have also become increasingly popular as Americans struggle with credit card debt. You’re probably familiar with the more basic outline of their programs: Loan professionals work with clients on a specific strategy to reduce unsecured debt (credit cards, almost always) and, afterward, they act as creditor representatives on their clients’ behalf. Argue for lower interest rates and, when possible, a waiver of past fees. Not only are their lauded services almost exactly the same as borrowers could do on their own without high-priced ‘advice’ (consumer credit counseling fees are ridiculously exorbitant given their limited results) but, just as often they are not , CCC industry itself also asks for remuneration from creditors. Only to keep their clients away from Chapter 7 bankruptcy. Add up all the dangers regarding credit scores, since CCC assistance is recorded on credit reports and viewed almost as poorly by loan analysts as bankruptcy protection, and we have to suggest all but the laziest debtors loan. Let’s find another way towards elimination.
Debt Settlement, on the other hand, although this program sounds superficially similar to the consumer debt counseling approach, is actually a unique strategy that is quickly winning converts given our current struggles. Like home equity loans, debt settlement firms will consolidate your debts at a lower rate but also insist on a repayment schedule longer than five years. Like consumer debt counseling companies, they will sit down with their customers to find a debt elimination program that best suits the customers’ individual needs, but, without taking any money from their competitor, they will successfully offer credit card reductions for overall credit loss. Let’s talk. Balance that (depending on condition) can hit up to sixty percent! This, obviously, is something the average borrower cannot hope to accomplish on their own. It takes not only the mediation skills and industry experience of the debt settlement counselor but also the assurance that each lender will not give more than the others – a clear run of corporate greed just from the initial consolidation provided by the debt settlement company. . There are costs, as with any financial proceeding, but unlike bankruptcy attorneys or CCC salesmen, most debt settlement consultations are free.
Still, it’s about what each family can do to make their situation better. For any potential debt management process, questions must be asked, and above all, some destructive habits must be eliminated. Stop Using Your Credit Card! Cut back whenever necessary! Find another job! Hold a yard sale or sell things online that you don’t absolutely need! Make sure you have the money available to actually pay off the loans you’ve already accrued! And, this may be the most important lesson, take the time to calculate a family budget and stick to it. Credit card debt mounts, largely, due to household spending that has gone unchecked over the years, and without any definite change of heart, those debts will come back only after the credit card balance is wiped out. This isn’t just a temporary problem with bills being forgotten. Credit card debt is a sign of a larger cancer ravaging the American economy – a lax approach to spending and a willful avoidance of the problems at hand – and, as hard as it may be to work your way off credit cards and Is the debt hole, in the long run it may be better.
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