Credit Card Debt – How to Avoid It

I recently received a good amount of money from a work related injury and now have the opportunity to pay off the $20,000 of credit card debt I now have in collections. Should I just pay the complete amount I owe or should I settle with the credit card company to pay only 25% of what I owe. This debt has been in collections for two years. What option would be better in the long run? I figure I’m already so late on payments how much worst can my credit get if I settle.

There are many people today who are having problems with debts and credit card debt negotiations are one of the alternatives that you can find in order to solve these debt problems. Credit card debt is one of the more insidious debts because if you cannot pay for one month or two months the interest just keeps building up. Eventually your credit card debt can spiral completely out of control leaving you with a debt that you will never be able to pay.

So what is the answer to this by adding debt problem? The answer is credit-card-debt negotiations. In order for you to begin your credit card debt negotiations you must first understand exactly what your financial position is. This means that you have to establish exactly how much money you have in earnings and how much money you are spending. If you’re spending is more than your earnings then you are in trouble. You can either increase your earnings or decrease your spending. The latter is probably the most realistic.

Once you have established how much money you can afford to pay to your creditors at the end of each month, you can contact the creditcard company and begin to credit card debt negotiations. You need to explain to the creditcard company that you no longer can afford to pay the required monthly payments and give them the exact figure that you can afford to pay, this will be a good start. They will appreciate that you have made contact with them and should try their best to come to an arrangement.



By: Jack Herbert

I’ve seen on t.v. how credit card debt councilors work with banks when people owe a lot of money on their credit cards. They say they can not only reduce the amount owed but also get your monthly payments down to where they are manageable. How do they do this, are there any consequences such as a reduction of credit score, and is it effective (do they really do this or is it a scam)? Also, how much do they charge? Thanks.

All is not well in the U.S. economy this days. But all is not well in many other nation’s economies. Such is the case in the world we live in – a global village and a global marketplace. Strong economies can raise up other struggling economies, and likewise – weak or faltering economies drag down other economies with it. And this is what in fact has happened.

Credit card debt has become such a problem today in the U.S. for many because of a domino effect that has taken place. One economy started to slow, and other economies started to slow as well. Weaker consumer spending then led to layoff by employers. This led to even less consumer spending, which led to even more mass layoffs. In the final tally, some 5 million jobs were lost during this recession. Ouch. And this has caused many consumers to struggle with simply making ends meet and surviving. Credit card bills? That is low on many people’s priorities, especially when one hardly has enough to pay one’s rent or mortgage, hardly has enough to feel and clothe one’s self and one’s family, hardly has enough to pay for electricity, gas & water.

But the collection agencies are persistent. They keep calling. They keep mailing. They often pass your account multiple times from one to another in a sort of credit collection orgy, if you will. Thus, it’s entirely for a consumer to pay their past due credit card bills in full – and then later be harassed by additional credit collection agencies for this same debt that has already been repaid.

It is what it is.

But the fact is that people are in need of debt relief to somehow help them with the credit card debt. Actually, we should say that people are in need of “real” debt relief, as opposed to the fake puffery and outlandish claims being made by bankruptcy lawyers and their amateur TV commercials. Bah!

True debt relief ought to be able to reduce and eliminate credit card debt without bankruptcy and all its harsh and long-lasting implications. True debt relief does in fact exist today. True debt relief is known as debt settlement.



By: John Lansing

www.americanprogress.org Has the economic downturn affected Americans’ credit card use? Is credit card debt more harmful than other types of debt? Can we protect consumers from falling too deeply into credit card debt? Tim Westrich of the Center for American Progress weighs these questions in the latest installment of CAP’s ASK THE EXPERT series.

Chris Tapp, UK deputy director of Credit Action, said: “Retirement should be a time for some well-earned relaxation, but for all too many it is a time of financial stress… when we consider that inflation hits the over-60s hardest, pension provision is looking increasingly shaky, and we have moved away from a savings culture, we can see that the levels of debt amongst the over 60s, as well as being a serious issue now, is one which is only likely to get worse.”

Though the above was discussing senior debt issues in the United Kingdom, the same issues apply in the U.S. and the world over.

According to a study done by the New York based research firm, Demos, “The debt increase is particularly sharp during the first years of retirement… people aged 65 to 69 saw their credit card balances grow by 217%….” And according to research by Bankruptcy Project at Harvard, retirees are now the fastest-growing segment of bankrupt Americans. As a certified pre-bankruptcy counselor, I can agree with the Harvard study and that a very large portion of my phone-ins are seniors.

So why are seniors being hit so hard? When you consider that retirement income is usually less than a working income (and often fixed), increased inflation affects purchasing even basic commodities… and it can be staggering. Consider the increase cost of oil. Heating oil is bad enough. But think about the cost of vehicle operation besides just your car. Everything must be transported and the increased cost of transporting even basic commodities has to be made up from someplace. The only place it can come from is the consumer’s pocket. Everything you purchase has an increased cost. That can of peas or the new sofa costs far more than it use to along with the gasoline to go purchase it.

But there is more. The younger generation grew up with wide-open credit but the senior did not. Many times there is a cultural difference between someone who grew up with credit cards and someone who did not. Many seniors are bringing credit debt into their retirement with retirement dollars straining to meet the budget.. Add to that increased late fees, over the limit fees, even back charge fees and you have a potentially catastrophic arena.

But there is also a longer life, increased health costs, deteriorating health and a credit card industry willing to open the doors of credit to nearly anyone that’s still breathing. When you are desperate, it is not an implausible thought that a credit card might look like the solution even for basic purchases. Unfortunately, all a credit card does is increase the inevitable. Like everyone else, seniors are paying for today with tomorrow’s dollars… dollars that are definitely shrinking form a fixed income.

So what can be done? The obvious answer is to plan early… the earlier the better. But what if early planning did not occur. Then tragically the only solutions left are the exact same solutions for every other consumer- increase income or decrease expenses.

Ahhh but therein lies the catch. How can you increase income when it is fixed? Often times this can be accomplished through imagination and creativity. Perhaps the senior can develop consulting opportunities or an online business. Perhaps something can be sold. Hundreds of additional ideas can be gleaned form online resources, written publications, and senior advisors. The point is, plans must be developed and enacted.

If increasing income is not an option then the only recourse is decrease expenses. Call creditors and request a decrease in interest rate. This may sound absurd but it is done every day. There are also scores of magazines offering ways to stretch your dollar. Similarly your favorite search engine will produce more frugal sites than you can ever read. Each of these sites informs the reader of ideas to save money and to accomplish exactly what you are already doing but for less.

Okay. You can’t increase your income nor stretch your dollar any further than it is already. Now you are down to credit counselling, debt management programs or debt negotiation. I strongly encourage you to be very careful in your selection of any of these avenues. In fact I encourage you to read other materials by this or similar consumer advocate authors, about each of these options. Tragically there are many unscrupulous agencies that take advantage of opportunities especially at the expense of seniors. Find out what the track record of the perspective firm. What is their completion rate? What does the Better Business Bureau have to say about them?

If the proper option has still not appeared, there is only one other recourse… bankruptcy.

Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini-course via e-mail. You can enroll at Debt Free In 7.5 Years.



By: Michael Killian

Are you sinking in credit card debt? Are credit card companies harassing you on a daily basis. Tune in to this week’s episode of “The Discount Trendsetter Show” to learn how to reduce your credit card debt in a trendy way.

A relative is going to loan me the money I need to pay off my credit debt. I’m suppose to file my appearance in court on Tues.

Should I call and make arrangements to send the payment in to the credit card company or the collection agency?

Do you think they will dismiss the lawsuit?

I have some credit debt left and I’m wondering if I should put the extra money I make from selling my home into the new house I’m purchasing or if I should go ahead and pay off the credit card debt. What is a smarter decision?
Just wanted to say I’m not late on my credit card bills, just wondering if I should go ahead and pay them off in full right away

Many people are currently struggling to pay off the large amount of debt which they have accumulated over time. The recent downturn in the economy caught most by surprise, leaving them without a steady income to make even the minimum required payments on their credit cards, and other financial obligations. And, unfortunately for most, the end is not on the horizon. Years of excess spending have now built a mountain of debt that will take time to pay. Yes, it takes time, but if time is what you have, use that time to your advantage. There are different credit debt reduction strategies that you can employ that will lead to a road of financial freedom.

Debts accumulate when we borrow money that is for short-term use, or for an emergency expense. Your debts will also accumulate when your debt to income ratio increases, delaying your ability to make timely payments. The interest rate piles up and your credit score goes down. The first thing that you need to do in a credit debt reduction strategy is establish a plan. You will need to gather all related information of what you owe, and to whom. You can never begin tackling debt if you do not know how much you owe. It may surprise you that most of your credit accounts and bills can be eliminated simply by cutting back on unnecessary expenses.

A common practice among many people overloaded with debt is to use a debt consolidation strategy for credit debt reduction. Having different credit cards with varying interest rates can often make it difficult to keep track of payments. Missed payments come back the next month with added interest and a late payment charge. Debt consolidation helps you to avoid this situation. Multiple loans and credit cards are consolidated into a single, affordable monthly payment. If you own your home, you might be able to get a home equity loan or line of credit, if your house has not lost too much of its value during the mortgage crisis. Keep in mind that you could lose your home if you do not repay the loan on time.

A debt settlement program may be worth looking at if you have more than $10,000.00 in debt. In this type of program, a person working for a debt settlement company will negotiate a pay off amount much less than the actual balance of the debt. Sometimes they can negotiate 40% to 50% of the loan balance to write off the debt and leave you free and clear after paying the obligation. The downside to debt settlement is that you will have to come up with a lump some in a shorter amount of time. If you are too far in debt anyway, that can be rather hard. You also may be responsible for paying taxes on the written off amount as income.



By: Louis Z.