Free Credit Counseling

420 Million Credit Cards, Almost 1 Trillion In Unsecured Debt!

         There are currently 420 million credit cards in the US, and growing, and just under 1 trillion dollars of unsecured debt. Couple this with delinquency rates hitting a 4 year high of 4.53%, and balances up by nearly 10% from 1 year ago and you have not a pretty picture. It's not that Americans are spending more lavishly on luxury items, in most cases, they are forced to use credit cards as an income supplement to keep up with rising energy and food prices. Many Americans realize that this is not a time to live beyond ones means, but if even after making substantial cutbacks still cannot make ends meet, they are left with no choice but to use credit cards to an even greater degree. Additionally, where people were using home refinancing as a source of extra income, with the significant tightening of the credit markets and complete wipeout of the sub prime lending industry, credit cards have taken front and center as the means of just keeping up.

       If things continue on this path, there will not be enough credit counselors in the US to clean up this mess. You might think that given this scenario, banks would have figured out that they are not helping the situation by charging onerous fees and interest rates. I recently met an individual with a 700 credit score who was offered a credit card at an introductory rate of 2.77%. The problem was that with balance transfer fees and nuisance fees the total APR was disclosed to be 72%. Additionally, many banks are reducing the credit lines of even cardholders with no late payments. Why? They are seeing the writing on the wall.

    There is no good reason to suspect that any of this will change soon. The price of energy is not going to retreat, especially not with increasing demand and need, and literally everything that we consume is tied to the cost of energy. If you think that any of our leaders can come together and make real solutions to any of this, you are kidding yourself. Those who are calling for change need to be aware that change is coming, but it may not be what they were anticipating.

    So, what to make of all this. As I consistently write in all my articles, now is the time to scale back your life. Live under your means. If you are carrying heavy credit card debt with usurious interest rates now is the time to to something to pay it off. Consider a debt management program. If you cannot afford your current credit card payments and are falling behind, consider a debt settlement program. Please, do not just ignore the problem, it will not go away by itself.

    If you would like more articles on debt solutions and have not done so already, please feel free to subscribe to this free credit counseling newsletter by visiting: http://freecreditcounselingblog.typepad.com/creditcounseling/. If you would like to speak to a credit counselor feel free to visit: www.americandebtenders.com.

Written By:

Steven Ciantro
Member National Association of Certified Credit Counselors
Help@americandebtenders.com

Should I Speak To My Creditors When Enrolled In A Debt Settlement Program?

    Wow! What a great question, and unfortunately, one which I have not seen addressed in to many articles. The general answer is, it depends on the guidelines given to you by your particular debt settlement law firm or company. When you enroll in a debt settlement program, and hopefully, it is one in which you are represented by legal counsel, that law firm will have its own set of guidelines on how to handle your creditors. The settlement law firm or its customer service arm, will send out letters to each of your creditors advising them that you have enrolled in there settlement program and now represent you concerning these debts. Will this make the creditors stop calling you? Not always. The original creditor can still call you, as they are not bound by the Fair Debt Collection Practices Act. Many times, however, once they learn you have enrolled in a settlement program and are represented by legal counsel, they will stop.
Some will just wait out the one hundred and eighty day charge off period, while continuing to mail you statements and offers to settle, and some will continue to call you.

     After one hundred and eighty days of non payment by you, the account will charge off and either go to an outside collector or there own internal collections department. This is where you are protected by the Fair Debt Collection Practices Act, as the act applies to collection agencies which are not the original creditor, but rather have been assigned the debt or purchased it for less than full value. Often times, the collection company will have received the notification that you are represented by settlement attorneys, but just not bothered to look, or simply chose to ignore it.

     The Fair Debt Collection Practices Act says that collectors cannot call you once they have been notified that you are legally represented. In fact, there is a penalty of $1000.00 per call, if they violate and you can prove it. Unfortunately, I know of clients who have enrolled in excellent debt settlement programs but against the advice of the company continued to take calls from creditors. Unless you have been advised by your settlement company as to how to handle these conversations, it can be disastrous. I know of one client who allowed the collection company to take $200. from her checking account as a one time payment, even though the account was placed with a settlement law firm and she was paying them at the same time. What happened? Generally, there is no one time payment with collection companies. They went into her account each month for four consecutive months before she realized she had paid them $800.00. She actually was angry at the settlement company, even though they had no idea what was happening, because she failed to contact them to get advice before she gave over her checking information.

    Some settlement law firms actually will tell you that they do not want you to speak to creditors enrolled in there program at all. Just let them do the job you hired them for, and call them if you have a question. Some settlement law firms will actually void any warranties they gave you in writing when you enrolled, if you speak directly to your creditors.

   The bottom line is, few people are trained in how to handle creditor phone calls. Thats why you enroll in a debt settlement program. You need to let the experts work on your behalf, because the creditors are trained to use scare tactics, that in many cases are simply not even true.

    If you found this article useful and are not currently a subscriber to our Free Credit Counseling Newsletter, please visit: http://freecreditcounselingblog.typepad.com/creditcounseling/ and sign up for our free feeds from our blog.

Written By:

Steven Ciantro
American Debt Enders
help@americandebtenders.com
Member National Association Of Certified Credit Counselors
877-766-2465