Now more than ever, the problems with massive credit card debt are coming to the fore front of our national culture. Against a background of dropping real estate values, unemployment reaching 1970s levels, and Wall Street in utter confusion, the steady accumulation of consumer debt by the whole of American citizens has become a drain upon the American economy and an utter weight dragging down the personal finances of almost every one of our countrymen. Households are now so utterly dependent upon credit cards for even the simplest of purchases that destructive buying habits have transformed our economy and negative spending is the order of the day. Furthermore, consumers have grown so used to dealing with their debt as a constant – credit cards somewhere between death and taxes on the list of modern inevitabilities – that they often can’t see any way out of their predicaments. In this article, we would like to merely offer a few suggestions for the harried borrower on how to best begin the process of debt management with an eye to erasing their credit card balances once and for all.
The first step, as with any emergency, should be the most obvious – do not panic. There’s reason enough to be concerned, of course, especially for those households who have already fallen into serious trouble with their financial obligations. It is understandable that borrowers who’ve begun taking out cash advances to pay down their other cards (and sometimes missing payments even then) must wonder helplessly what can be done. The very nature of credit cards, with credit now so very available despite lowered FICO scores and additional accounts regularly being offered even after other cards have been maxed, plays to shoppers worst instincts, and, almost before they’re aware, individuals and families can find themselves holding debt burdens than even their grandchildren might be held accountable for should debt spending continue unabated. However, breaking the chain of credit card debt is far easier than you might think. Once again, though, this sort of lasting debt relief requires a steady hand and reasoned deliberation regardless of the pressures you and your household may face.
The greatest immediate stress, of course, comes from the incessant harassment of debt collectors ringing the phone hourly to demand full repayment of delinquent bills (no matter how clearly unlikely such a scenario would be). For particularly unlucky borrowers, the collection agencies call so frequently and send so many threatening notices that the debtors just take the phone off the hook and throw their mail directly away. This is the wrong approach. This is nothing more than a weak surrender to the forces of credit card debt. Legislation has been passed in recent years giving delinquent borrowers far more leverage when dealing with unscrupulous bill collectors no matter how much the borrowers may owe. When a debt collection agency rings your phone, do answer and, with businesslike grace, explain that you are dealing with your situation and shall soon set up a payment plan, but, until things have firmly been organized, you would appreciate an end to the telephone harassment. Speak with a manager if necessary. Merely by informing the collection agent that you do not wish to receive calls, they are bound by law to refrain from any further contact. Furthermore, take down their information and send a letter – while keeping a copy for your own records – reiterating that you want an end to all correspondence. If they continue to bother you at home (or, even better for these purposes, at work), then you could take the collectors themselves to court!
Of course, just because you successfully ended the phone calls does not mean the creditors will suddenly forget about the debts you still owe. The next thing to do would be to call customer service for every single one of your debts – even the ones still in good standing – and request to talk with a representative one step up the corporate ladder who may be able to assist you in your plans for debt relief. Credit card companies do not want to lose a customer, as you may imagine, and they certainly want to know that their clients still intend on paying back their existing debts. To that end, a majority of the lenders will actively help lower interest rates (often by as much as thirty percent) temporarily, waive some of the over limit or past due fees and charges 債務重組服務 that may have accumulated over the years, and, almost certainly, work out a more favorable payment schedule once they truly believe you are in the process of straightening out your finances. If payments were late or unpaid because of a genuine calamity – be it unexpected unemployment or a family tragedy or even sickness and hospitalization – they will certainly be more willing to bend the corporate rules and may even overlook the missed payment: not that they’ll forgive the money but they sometimes will forget to send evidence of such to the three credit bureaus that effectively determine your FICO scores and credit ratings. Remember, the absolute worst thing for the lenders would be a declaration of Chapter 7 bankruptcy (though, as we’ll later discuss, this threat holds less and less water) or a simple abandonment of payments altogether that would force the credit card companies to discharge the loans for tax break purposes. Both options are fairly ruinous to the borrower, but they yet happen often enough that the credit card conglomerates will do whatever it takes to prevent any chance of such occurring.
The borrowers themselves however should avoid any possibility of actual loan default. While the companies themselves may be able to land hefty tax exemptions for their presumed losses, they still maintain legal proprietorship for the debts and could put a lien on the debtor or take them to the courts at any time. Similarly, bankruptcy protection, much as it is regularly portrayed in the media as the answer to a desperate borrower’s prayers, has been severely neutered by recent changes to the United States bankruptcy code and no longer offers any guarantee for those debtors still gainfully employed. Using something called the means test provided by the Internal Revenue Service, the courts now send most debtors seeking Chapter 7 debt elimination bankruptcy protection into the debt restructuring program of Chapter 13. This is essentially a debt management program as overseen by the less than understanding guidance of the federal government and one that, though credit cards will be paid by penalty of law, seems hardly worth the expense of bankruptcy attorneys. With both, the effects upon FICO scores and credit ratings cannot be overestimated. By declaring bankruptcy or defaulting upon a loan, you not only are giving up credit opportunities now, you are giving up access to homes, vehicles, even, these days, employment potential for nearly a decade of your life. Credit card debt must be dealt with, but there are better solutions available.