Credit Card Debt Problems

Credit card debt problems surround and haunt millions of Americans who have discovered that the little tiny plastic cards have wreaked havoc on their lives through their propensity to grow larger and larger debt each month. Because it is documented by the Federal Reserve Bank that revolving charge debt has reached almost nine hundred and seventy billion dollars, each American has an average of twenty nine hundred dollars of charge card debt. This includes children, those with cards and those without. Since credit has been handed out to everyone like candy in a parade since the early nineties, the result is the financial meltdown happening in the last quarter of 2008. Those who had questionable credit histories were given sub-prime mortgages and coupled with the increased use of plastic cards for everything from groceries to golf; the results may prove to be too much for the country's financial back to carry. Enter the "Feed the Pig" campaign by the government urging the consumer to drop his credit cards inside a cement mixer.

When discussing credit card debt problems, the heart of the issue lies in the materialistic nature that many Americans have developed over the past one hundred years. Advertising execs have discovered that appealing to the baser instincts of lust, envy and covetousness in consumers opens a floodgate of irrational thinking and financial gluttony. In many cases, we are told by Madison Avenue that we actually "deserve" the offered product. And consider that "buy now and pay later" was once the mantra of businesses that worked on the assumption that a credit account would be cleared in thirty days, but now pay later can mean on or about the time a team lands on Mars for the third time. Credit card debt problems are really difficult to grab onto because they can either happen in a one day splendiferous shopping spree or like tooth decay over a long period of time. But in either case, it is the allure of the painless purchase that reaches into so many of our minds and messes with them. The solutions to debt problems are not fun, they are not painless and they are not easily attainable.

The two most positive of all the answers to credit card debt problems are often the ones that no one wants to do. The first one is to not get rid of, but sell a whole bunch of stuff that has been bought with the charge cards so start by making an inventory of everything you must have to exist, and no, the television and probably the computer don't count and if the meddling really gets personal, neither does the cell phone. Come on, how badly do you really want out of this predicament? So even if a person has to live the life of a monk for a year or two, isn't that better than drowning in a money quagmire? Put stuff on EBay, have a garage sale, get rid of the second car, the motorcycle and Jet Ski. Sell the golf clubs (this is really getting hard on the guys) and the hobby stuff and just admit that next time it will be different. The other positive step to solving credit card debt problems is to get a second job and put all of the money on the credit principle while still making regular monthly payments; groaning and moaning won't work here, it's a matter of the doing what is best.

The solutions now offered for credit card debt problems are very costly in terms of one's financial reputation. The first and most non-invasive answer is to seek help from a credit counseling service. These services will arrange with the card lenders to have interest rates dropped from thirty to fifty percent, freeing up quite a bit of money for the consumer each month. In exchange, the consumer sends a single check to the service which takes out about ten percent for its expenses and passes on the rest to each lender who then sends a monthly statement directly to the consumer in order to chart debt reduction progress. Holding to the program religiously, the consumer can be out of debt in from three to five years. But here is a little secret: the consumer can do all of this himself and save money that would otherwise go for the counseling service. If a person jumps ship and ends the program prematurely, the lenders will pour on the interest and things will get bad in a hurry.

The most drastic and horrible solution for credit card debt problems is bankruptcy, one not endorsed by this website. And by the way, it's sad to announce that credit counseling can have the same negative affect on a borrowing history as bankruptcy. Chapter seven bankruptcy wipes out most of the assets a person owns, but each state is different in what possessions can be kept. Chapter thirteen bankruptcy asks for lower interest rates and a long period to pay back all debts, driving the entire monthly obligations downward in cost to the consumer. Each legal filing has costs between one thousand and twenty-five hundred dollars and will sit like a stubborn and smelly mule on one's borrowing history for ten years. The heart of credit card debt problems may lie in our desire to obtain all the stuff that collects dust, sits in attics, rusts, falls apart and quits being shiny after a while. The Bible reminds those who are Christians that life can have a higher purpose when it says, " "Let your conversation be without covetousness; and be content with such things as ye have; for he hath said, 'I will never leave you nor forsake you."" (Hebrews 13:5)

Consumer Debt Solutions

Seeking solid consumer debt solutions is always a wise step for anyone facing the crushing weight of an overextended budget. There are a wide variety of options that are available for anyone who needs to deal with indebtedness and find a workable plan to keep financially on track. Consolidation loans can bring all debts under one loan and one monthly payment. Many consumers opt to take out a home equity loan to consolidate debts. This approach has the added benefit of providing an extra tax deduction for borrowers. Professional counselors can also work to negotiate with creditors and condense unsecured debts into one payment that is dispersed by the counseling agency. Any assets that can be sold and used to pay off indebtedness can also provide a viable solution. In a worse case scenario, bankruptcy may be the only solution, but should be seen as a last resort that is only to be used when all other avenues fail. Of course, there are a number of web sites that offer help for personal financial dilemmas. Whatever choice among the many consumer debt solutions an individual might make, they should not be too quick to sign on with any of these organizations. While many agencies are reputable, others could put a potential borrower in danger of paying exorbitant fees or even identity theft.

One of these consumer debt solutions is credit counseling. Turning to a professional counselor for advice on budgeting and other fiscal management tools can be a wise move as long as the organization that is providing the counseling is reputable. While some counselors will work with a client on basic issues such as budgeting and cutting expenses, many organizations take a different approach. Contacting creditors and negotiating a plan for paying back debts is a service that is offered by bill consolidation agencies. The negotiations are aimed at reducing interest rates, putting a halt to collection agency harassment, curtailing costly late fees, and combining the monthly payments on all applicable debt into one. Often, a creditor will participate in these negotiations because they realize that this may be the only way to recover even a part of the money that is owed them. In the event of a bankruptcy filing on the part of the debtor, the creditor will most likely receive no further payments. An important point of negotiation should be the re-aging of the debtor's accounts. Once the accounts are reflected as up to date, a borrower's credit score will generally not be impacted unfavorably by the consolidation. When attempting to find workable consumer debt solutions, loan consolidation may be a reasonable choice.

Another method of consolidating debts is the secured loan. These loans involve some kind of collateral that can be repossessed in the event of a default. Home equity loans are common consumer debt solutions. The equity in a home is basically the difference between the value of the property and any remaining balance on the mortgage. Sometimes called a second mortgage, this loan can be used to pay off a borrower's debts in full. Then the borrower will simply make one monthly payment on the home equity loan. Careful budgeting and planning for monthly expenses must go hand in hand with a loan consolidation approach. If not, the individual may find themselves repeating the same mistakes that got them in over their head in the first place. Often, a borrower may pay extra on a home equity loan if they are able to afford it. By paying extra, more money will be applied to the principle debt and less to interest charges. These extra payments can also help a borrower retire the debt earlier than scheduled. Such consumer debt solutions can also provide welcome tax deductions. The Bible talks about the way that God views the prayers of believers. "The sacrifice of the wicked is an abomination to the LORD: but the prayer of the upright is his delight." (Proverbs 15:8)

Basic money management tips should not be ignored when a borrower is on the lookout for consumer debt solutions. Most borrowers need to take a long look at their buying habits and lifestyle expectations. Necessary adjustments that bring these expectations in line with income are always a positive step. The careful and sparing use of credit cards can also help bring family budgets in line. Using cash advances on credit cards to meet expenses or pay other bills is a habit that should not be indulged. When purchases are necessary, comparison shopping to find the best possible price can help make ends meet while also meeting material needs. A reasonable budget that is adhered to while avoiding impulse purchases can go a long way toward handling pressing financial problems.

When dealing with consumer debt solutions, there are a few things that a borrower should look out for. Unfortunately, there is little oversight of businesses that offer debt counseling. As more and more families struggle with mounting debts and the possibility of bankruptcy, some organizations seek to take advantage of desperate borrowers. In general, if an organization contacts a debtor via telephone solicitation or spam e-mail, that organization should be avoided. An individual should check to see if an organization is a member of the National Foundation of Credit Counseling. The NFCC has strict guidelines for all members. A debtor should never disclose sensitive information such as credit card numbers or bank account numbers over the telephone and certainly not to any agency that has not been carefully researched.

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