The Practical Point of Connection Chances are, if you personally have a serious interest in developments in connection with credit cards, it's because you already have too much credit card debt. However, the effects of developments could impact all of us, not just those people who have an existing problem. There's a growing number of economic forecasters that are saying the problems with the amounts of credit card debt could be the cause of the next big financial meltdown. That could be likely because of the effects of continuing job losses, and the rising number of consumer bankruptcies. These issues are connected in what economists refer to as "chain effects", meaning, one thing is tied to other, related, situations. Among those, loss of a job can obviously affect a victim's ability to pay their bills. If these "connect", credit will continue to remain tight for consumers. And, as we've all painfully learned by developments over the past year, or so, lack of access to, and availability of credit, is the #1 immediate, high impact problem that cut the legs out from under our economy. If banks continue to take enough hits in write-offs, it's almost a sure bet that access to credit will get locked-down, again. In theory, it's likely it could be, "Bailout, Take 2". The only problem with that is there is a limit to how much the federal government can put up to do another bailout. (unless the Fed and Tresury just keep printing money, but if they keep that up, a buck will continue to lose further value called, "hyper-currency inflation" -- shades of Germany after WW1, etc.)
The more immediate, practical things consumers have to deal with is finding ways to reduce their credit card debt problems, and failing that, some of the things consumers will have to learn in dealing with bill collectors. These just aren't happy things to talk about, or deal with, but unless solutions get identified (or paths to solutions), things will only get harder and tougher.
When problems of this nature start, things tend to cascade on you very quickly. That an be emotionally overwhelming and draining, and cause you to be very short-fused and depressed. Typically, the first sign of financial depression is you stop opening the mail when you see who it came from.
Planning Pointer: It may not be as bad as you might imagine. One trend that started, is some creditors, given the economic situaiton are relatively more willing to work with cutomers who have fallen behind. The thinking goes (with some creditors) that if defaults are widespread enough, there's no practial percentage in it for them to just hammer everybody. That will only cause them more problems, if it gets bad enough.
Planning Pointer: Go towards, not away from, whoever it us that's chasing you. Denial and deferring might make you feel relatively better for the moment, but that will only give teeth to a creditor when they pick up on the fact that you're ignoring them. If you contact them, showing them you want to get things squared away, (as well as you can) that might make them more open to negotiating with you, to work out some kind of plan to get things corrected and settled. It's at least worth a try.
Planning Pointer: One thing you really don't want to ignore is mail from a court of law. It is bad news. In it, you'll be informed you're being sued. Time to take action. Get a lawyer. Typically, sources of either free, or low-cost, legal help are included in these things if you can't afford to pay for a lawyer. Get right on it. If you don't, you'll lose by deault. Then, all kinds of real unpleasant things can start happening. It's not, "academic". Your income, or assets, can get attached, etc. They may even try to sell your home to get the debt settled. You definitely need an attorney to help you either cut if off, or reduce the effects of it as much as possible.
Credit Counseling Companies: You have to be very careful who you deal with in this sort of situation.
Scams abound. In the March 28, 2008 issue of USA Today they carried an article entitled, "Scammy Credit-Repair Firms". A typical warning sign of a scam is the need, or demand, for an up-front fee, often with promised, or "guaranteed" results in exchange for it. Take a pass. The reality is, a lot of banks, and other creditors, refuse to even deal with them. You end up with the same problem, with a loss of whatever they talked you out of.
Sources of Credit Counseling Help
www.usdoj.gov/ust For a list of State-approved counseling organizations;
National Foundation for Credit Counseling (a trade group) 800-388-2227 For a list of reputable counseling firms in your area.;
Try a credit union. Many offer free help.;
Federal Trade Commission For sound advice in credit repair companies. Detailed information on how to repair your credit. Web: www.ftc.gov/bcp/conline/pubs/credit/repair.shtm
USA Today. Free, "Managing Your Money", e-newsletter. Web: www.email.usatoday.com
Debt Collectors Some debt collection companies, or agencies, are ethical and reputabale. Some aren't.
All are subject to federal law under the "Fair Debt Collection Practices Act". (Try the FTC website)
If you believe a debt collector stepped out of line you can file a complaint against them with the Federal Trade Commission (FTC.gov), and your state attorney general's office.
In essence, debt collectors are not allowed to run roughshod over you, no matter what they say, or demand from you. If you'v got this kind of problem, it's worth doing some homework so you know your rights and the limitations imposed on debt collectors. By way of example:
* Don't simply agree with a collector that you owe (or did owe) a debt. If you do, it could be held that you "reaffirm" a debt you don't even owe, or it's old debt that's outside the statute of limitations for collection in your state. (typically, 3-6 years old);
* Make a collector document the debt, before you agree (if you do) to anything.;
* You are not obliged to reveal to a debt collector such things as your place of employment, the name of your bank, or your account nubmer.;
* You can demand they stop calling you, but you have to put that in writing to them. (Collectors are only allowed to call you between 8am-9pm. Before, or after, they broke the law);
* Collectors are not allowed to threaten you with arrest, use obscene language, or take your property (without winning a legal settlement)
If a collector does any of these things, they broke the law. You can file a complaint with the FTC, or your state attorney general's office, as noted above.
* Old debts are called, "junk debt", or "zombie-debt". For, "How-to-Guides", in dealing with them try this website: www.wlkihow.com/deal-with-zombie-debt
Bone-up on this for your rights under that federal law, the "Fair Debt Collection Practices Act".
Till next time. My best regards to each of you.
Walt