The phone rings and you are overcome with a feeling dread. Is it another creditor calling you again demanding payment?
For many people this is an everyday occurrence. But it doesnt have to be. If you are in financial trouble and there seems to be no way out, bankruptcy may be the answer. Although it may be a difficult decision to come to, filing bankruptcy can put an end to those demanding phone calls from creditors.
Laws in Place to Protect Borrowers
It can be very frustrating not being able to pay back debts. However, many people find themselves in this predicament where they have borrowed more money, or ran up more credit than they can afford to pay back. And once you get behind on bills, the creditors are relentless and call morning, noon and night demanding payment. You may make promises to pay and then find there is just never enough money to make good on those promises. Once your back is against the wall and you are forced to file for bankruptcy, the harassing phone calls should stop.
Before you file for bankruptcy it is important to find out what the bankruptcy laws are when it comes to creditors. The bankruptcy laws were designed to provide protection for you the consumer against the continued harassment from creditors.
According to the bankruptcy laws, after the borrower has filed for bankruptcy the creditors are not allowed to contact the borrower. However, some creditors plead ignorance of the law and keep on calling.
If the harassment from creditors continues, you may need to seek the legal help of an experienced attorney who knows the bankruptcy laws. This attorney can contact these offending creditors and put a stop to the threatening calls and mail. Although hiring an attorney may cost you some cash, it will provide you with some much-needed relief from creditors.
Once you have an attorney on your side they not only can put an end to harassment from creditors but they can also help walk you through the tangled web of the bankruptcy process. Although filing bankruptcy may not have been a personal goal of yours, in a tight situation it can provide you with some relief and having an experienced attorney can help ease you through the process. Hopefully in the end, you will be happy to answer the phone again.
I posted a new article on the DebtSmackdown.com blog and thought I’d link it from here as well, in case you’re not signed up to receive automatic updates over there.
Make An Extra $50 Payment On Your Credit Card This Month
If you want to get your cards paid off anytime soon, you need to make more than the minimum payment every month. That article will give you some tips for doing that.
One of the most frustrating parts of falling behind on a debt is when the creditor loses patience in trying to collect on their own and sends your balance to a collector. You may have heard horror stories about collectors harassing borrowers who are struggling to pay off debts. Harassment was a technique that many collectors turned to historically to collect debts and the Fair Debt Collection Practices Act was put into place to protect borrowers with outstanding debt from abusive, illegal, and unethical collection practices. Consumers do have rights, and the Act defines these rights explicitly.
Prior to 1977 when the Fair Debt Collection Practices Act was passed, debt collectors used several means to collect debts that were annoying, embarrassing, or even dangerous to borrowers. Some of the collector’s tactics included threatening phone calls in the middle of the night, showing up at a borrower’s place of employment, posing as an attorney, and going to great lengths to let other people know about the borrower’s financial struggles. The Act outlined several rules that debt collectors must follow, including:
- Phone Calls: Collectors are allowed to contact borrowers via mail, fax, telegram, or phone, but calls must be made between the hours of 8AM and 9PM local time.
- Third Parties: If you have hired an attorney to help with your debt problems, a collector must contact the attorney with all communications. The collector is also not allowed to disclose the fact that the borrower is in debt to anyone outside of the situation.
- Written Notice: A collector must give written notice with all applicable details of the debt they are seeking to collect within 5 business days of contacting the borrower.
- Harassment: A collector is not allowed to abuse or harass borrowers, including posing as an attorney or credit bureau employee, share your debt problems with other people, threaten to have you arrested or your wages garnished, or sue you when they have no intention of taking such action.
For borrowers, passage of the Act was a consumer rights issue. Prior to the Fair Debt Collection Act being passed, borrowers were subjected to poor treatment from collectors who would use any means necessary to force payment. Consumers now have the right to fight back. If a collector violates the terms of the fair debt collection act, borrowers can sue collectors for damages on top of court costs.
Opponents of the Act say that frivolous lawsuits have made debt collection more difficult. Some borrowers with legitimate debts make it very had for collects to do their job. Frivolous lawsuits have emerged as borrowers hope to be awarded damages even when the rules of the Act are followed. Consumers should know their rights, but should also know that they are responsible to pay their debts. If debt collectors are contacting you, it’s a good idea to discuss your situation with a credit counselor or an attorney instead of fighting debt collectors through loopholes in the Fair Debt Collection Act.
One of the most serious financial problems facing Americans today is the issue of credit card debt. The concept of credit is nothing new, merchants in the late 1800’s in America were exchanging goods and services for currency known as credit coins or charge plates – essentially a promise to pay for the goods or service in the future.
The first plastic credit card was created by American Express in 1957 and over the last 50 years, the use of credit cards has become increasingly common. Today, the average American has 9 credit cards showing on their credit report, and the average consumer has four credit cards in their wallet. Even if the credit accounts aren’t all open at once, most Americans are all too familiar with swiping the card to pay for life’s expenses.
Consider these alarming statistics:
- Total consumer debt in the US not including mortgage loans is $2.46 Trillion. Of this total, over $900 billion is credit card debt.
- One in six credit card holders pays only the minimum payment every month.
- Since 2002, the rate at which cardholders pay down balances has decreased annually.
- For the first time in US history, the American savings rate is negative.
There are several factors contributing to the growing problem of credit card debt. Since the early 1980’s, banks and other issuers of credit have bombarded mailboxes with tantalizing offers for credit. Citing low interest rates, pre-approved credit, and a promise to have a card in your mailbox within just 2-3 business days, it’s easier for Americans to get their hands on credit cards than ever before.
College students walk past booths on campuses offering free t-shirts, gym bags, or beach towels in exchange for signing up for a new credit card. Department stores offer discounts to shoppers who use company specific credit cards. And with the growth of technology, consumers can shop from home with a credit card, having items delivered to their doorsteps without ever setting foot in a store.
We all know people burdened with excessive credit card debt and have heard the stories of how the problem grew little by little until it was too much to overcome.
What are the risks of high levels of credit card debt?
First, revolving credit is notorious for charging high interest rates, and card companies are known to increase rates without warning. Many cards often charge annual fees, not to mention unreasonable late fees if payments aren’t made in a timely manner. The minimum monthly payments associated with most credit balances are so low that cardholders paying only the minimum are just digging deeper into debt.
Credit scores suffer with credit card debt, leading to difficulty in qualifying for loans. Often, excessive credit card debt spirals into bankruptcy.
The key to stopping credit card debt is to stop adding to your balance. Consider options like reducing your interest rate by consolidating your debt. Most importantly, control your use of credit so that your credit card debt can’t control you.
One of the most stressful parts of life for many consumers is managing their debt. While debt has basically become a necessity in this day and age, an increasing number of Americans are finding themselves in financial turmoil from taking on too much debt.
Uncertainty in the economy is causing people to feel even more stress financially, and more people are looking for relief from the burden of debt than ever before. There are many options for debt relief available to consumer, but it’s important to understand the many choices available, as there are pros and cons to each choice.
The most natural path to debt relief is finding a way to pay off your debt on your own. The first step here is to stop spending money that you don’t have. Building up thousands of dollars in credit card debt will dig a hole that many consumers can never emerge from and make them slaves to credit card companies.
Get rid of your credit cards so that you’re not tempted to use them. Pay off the debt with the highest interest rates first, and work your way lower. Make more than the required payment to reduce the amount of time you’re making payments – paying as little as $10 above the minimum payment on your credit card each month can cut the time you’re in debt in half.
Sometimes it requires a second job, more disciplined budgeting, or even selling assets, but will lead to much greater financial freedom in the future.
Of course, paying off the debt is not always a realistic option. For those who need to look at other alternatives, talking to a reliable credit counselor will help you to weigh your options. The option you choose is very important, as future lenders will surely take a thorough look at your credit history. Credit Counselors offer resources to indebted consumers and help them to make the best decision. Some of the options include:
- Debt Consolidation: Combining your debt into one big debt can often simplify your financial life and allow you to pay off your debt at a lower overall interest rate. A home equity line of credit is a great way to get a tax write off and generally lower rate, although this may not be an option for all borrowers.
- Debt Negotiation: Hiring someone to negotiate a lower balance with your creditors will make the seemingly insurmountable task of paying off your debt manageable again. Creditors would rather get a partial payment than nothing at all and are often willing to work with borrowers.
- Bankruptcy: As a last resort, getting a court order releasing you from your liabilities is one way to get relief from debt. It could cause headaches in the future if you’re trying to get a loan or get a new job however, so it should only be used in the most extreme cases.
Relief is available to borrowers burdened with heavy debt, but knowing all of your options is critical to making the best of a bad financial situation.