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Credit Card Debt
This form of unsecured debt is like a noose around the neck of all who carry it. It used
to be we could carry a balance on our cards and get them paid off in a reasonable amount
of time. But, the rules have changed, now that idea is a dangerous proposition. In the
past the interest rate remained stable enabling us to pay down the principal and
actually resolve the debt. Now the rates are no longer stable and climb automatically till
most of the payment is going only to interest and almost nothing to principal. Making only
the minimum payment on your balance will require 15 - 30 years to pay off the debt. Is
that what you had in mind?
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Taking so many years to pay down your credit card debt means that you will pay out 5 - 8
times the original amount you borrowed! This happens through the miracle of compound interest and the consumer has fallen for it. As stated before, the rules were changed in 2005 and no one noticed. The bankruptcy laws were changed to allow the credit card companies to turn an unsecured debt into a quasi secured debt. What changed specifically is that they can now attach your house and wages.
Bankruptcy is no longer a simple solution since the laws changed. The way it works now is
you have to go through credit consolidation before bankruptcy. Bankruptcy is not allowed if
you can pay $100 per month toward your debt. That's right, with the penalties and interest
rates jacked to the highest levels you'll NEVER get out. Death will be the only escape, but
then, your heirs have to cover the problem then.
If you are willing to face the problem, very good help is available to you. Depending on your situation, consolidation or settlement could be the answer and it won't cost you anything to find out. Expert counselors help people out of this mess every day. They work for and with companies that talk to credit issuers every day and know them on a first name basis. The problem is so widespread that your lenders know there's a good chance you'll be going down this road.
How do they know? All they have to do is look at your credit to debt ratio, debt to income ratio, timeliness of making payments and interest rates. They share this information with other lenders so they know all about your finances. They know statically, what the tipping point is for the above stats and expect you to either default, take action or win the lottery. Which is mostly to happen? Action looks good.
Get a free credit card debt consolidation analysis.
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