Credit Cards and Debt Settlement

Credits cards were originally designed to give the consumer short term borrowing ability. The cards were first used by major department stores for purchases only at their locations. In some cases, this was the consumer’s first credit card or credit in their name. Then the first major credit card issued by a non-retail company was the Diner’s Club card. This card was considered to be a business card to cover entertainment and meals and repaid in full each month. Then the major banks become players in issuing credit cards and the borrowers were on their way to creating new financial problems for themselves.

In the beginning, the consumer used the card judiciously and paid off the balance in full monthly. However over time, the consumer started paying only the monthly minimum payment along with a little bit toward the principal balance. The consumer was alright with this practice because they had enough monthly cash flow along with a good job and the economic was doing fine. From time to time because the economic climate was on the up swing, the consumer had equity in their homes. Because of the equity, the consumer would refinance their homes at a lower rate and take monies out to pay off their unsecured debt. This way of handling finances was alright as long as the economic was in a positive position.

This all changed over the past several years. Consumer’s started facing financial hardships, lost of job, reduced salaries, and divorce or faced a medical emergency along with the adjusted interest rate on their mortgages and increased unsecured credit card debt.

The consumer was faced with the reality of how to get out of debt. In most cases, this is the first time many consumers were faced with these uncertain financial times. So the consumer started looking for ways to payoff their financial obligations.

One of the options the consumer is selecting is a debt settlement program. Debt settlement is a method by which a third party negotiates with the lenders to reduce your obligation by up to 50% of the outstanding debt. The consumer puts aside a set amount of monies each month into a “trust/escrow” account over a period of 12 to 48 months depending upon the amount of their credit card debt. The debt settlement company starts to negotiate when at least half of the lowest balance is in the account. This proceed is repeated until all debts are settled.

Can a debt collector talk to other people about my debt?

If you have an attorney, the debt collector can only contact the attorney and not you. If you do not have a lawyer, a bill collector can contact other people but only to find out where you are. The cannot tell you about the debt and their opinion about you and the debt. Most collectors are usually prohibited from contacting such third parties more than once. Usually the collector may not tell anyone other than you and your lawyer that you owe money. If you have any questions about collections, you should read the Fair Debt Collection Practices Act.

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What is the Fair Debt Act?

How do I get Creditors to stop calling me?

Are you being harassed by your creditors? Can you get a creditor to stop calling you? The only way to get a creditor to stop calling you directly is to hire an attorney. An attorney will send out a cease and desist letter and inform the creditor not to contact you and to direct all communication to the law office. If you don't have an attorney, you do have rights. I would recommend reading the Fair Debt Collections Act. If you owe a creditor money, they do not have free reign to call you whenever and wherever they want. They can only call you certain times of the day. They are not allowed to call you at work it you tell them not to.

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I Am In Debt. How Do I Get Out Of It? Start With How You Got There!

For most of us, getting into debt did not just happen over night. While there are a few exceptions about how someone gets into debt (like a sudden illness or death of a spouse), I suggest that the root of our debt problems in the United States is due to us listening to our wants instead of our needs. The good news, to get out of debt we have to listen to ourselves saying discipline and strategy will get you out of debt.

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Can creditors harrass me?

If you owe a creditor money, they can call you. They cannot harass you or be inappropriate with you. Read this article on the Fair Debt Collections Practices Act to learn more about your rights. Once you know the rules you can turn the tables.

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