Can’t Make Your Credit Card Payments – What’s Next?

Are you worried about the future likelihood of not being able to pay your credit card debt?

Are you already behind in your monthly credit card payments?  Have you interest rates and monthly minimum payments been increased?  Have you suffered late payment penalty fees?

Has bankruptcy to eliminate credit card debt crossed your mind?

Unemployment, a devastating health problem, a family death, an unsuccessful business, or something else could have ruined your finances.  Regardless of the cause of your credit card debt troubles, you can avoid the distress and negative thinking about bankruptcy or predatory creditors with some basic knowledge of unsecured credit card debt.

Learning the truth about credit card debt collection is the key to peace of mind for consumers with late credit card debt, and it is the way to eliminate credit card debt, according to the Credit Card Debt Survival Guide. Eight percent of American adults (That’s 18 million people.) missed a credit card payment in the last 12 months, according to creditcards.com.  If your account is in arrears, it is one of millions. Your delinquent account can be one of thousands, tens of thousands or hundreds of thousands of credit card accounts sold in a package of junk debt for ten cents on the dollar or less to a junk debt buyer.

The credit card companies must budget for bad debt per Federal Reserve regulations.  Their planning assumes a certain percentage of consumers will not pay their credit card debt.  Then, the credit card debt collectors who end up with those debts assume there are two kinds of consumers; those who do not resist their collection efforts or do so ineffectually and those few who do resist to eliminate their credit card debt.

Your safety and security are in the numbers, in the millions of charged-off accounts and in the pennies per dollar each is actually worth. If you resist debt collection attempts (after you learn how to properly do so), it is simply not profitable for a debt collector to put more time into chasing you, when they can put that time in getting the easy returns from the many other people who put up no resistance.  Credit card debt collectors can make a lot of money, if they only collect from 50 percent of the delinquent accounts assigned to them.

An understanding of the Fair Debt Collection Practices Act, your state’s consumer protection laws and, if needed, your local court’s rules of civil procedure will make it possible to turn away debt collectors and eliminate credit card debt.

Four Tips about Financial Planning

Financial planning is a very broad topic. It includes things such as budgeting, debt management, retirement planning, etc. Here are four tips to help you with the basics of financial planning.

1. Budgeting is a very basic component of financial planning. You need to know how much money you have coming in, how much money you have going out, and the difference between the two. Preferably, you need to have a positive cash flow. If you find that you are spending more than you make, then you need to make efforts to decrease your expenses and/or increase your income.

2. Get out of debt. After you have created a budget and determined what your cash flow situation is, you need to make a plan to get out of debt. Having too much of a debt load is a financial burden, and can cause you trouble if something happens that is unexpected, such as health issues, unexpected repair bills, or divorce.

3. Contribute to retirement savings. Fewer and fewer companies are offering pension plans, and Social Security is not a guaranteed option. You need to be saving for your retirement and planning for the future. You also need to take into consideration that people are living longer these days and so your money is going to have to last you longer.

4. Make sure you have enough insurance coverage. Once you have created a budget, cut down on your debt, and started planning for retirement, then you will need to make sure that you have enough insurance. Not having insurance can destroy all the hard work that you’ve done in trying to get your financial affairs in order.

You need to take into consideration what your needs are as far as health insurance, life insurance, home owners insurance, etc. Don’t be tempted to cut back on your insurance coverage simply to save a few dollars. One disaster is all it takes in order to regret that decision.

If you pay attention to these four basics of financial planning, you will find yourself with a lot less stress and with a lot more financial stability.

Debt Consolidation – A Real Benefit or Nasty Curse?

Debt consolidation, which sounds like a fancy and complicate idea, is really a very simple thing. Debt consolidation, in its lowest form, means taking all of your high interest consumer loans (credit cards, etc.) and placing that debt into one lower interest rate loan. Not complicated at all – right. Well, not on the surface.

Debt consolidation sounds like a great idea that should be done at every possible turn – in order to save you money. Not so fast – like everything else in life, there are pros and cons to debt consolidation. Here are just a couple of them.

• Hire a Debt Consolidation Company, or do-it-yourself? For pure convenience, hiring a debt consolidation company would be the best option. For a fee (sometimes a rather large fee) these types of companies will analyze your financial information, then recommend ways that you can save money by taking out a new loan to cover your debt. Sounds simple – right? Yes, but would you really be getting the best deal? Saving the most money? Doing what’s really in your best interest? Well, in a word: no. Debt consolidation companies do not have your best interest at heart – they’re looking for the biggest profit they can make. And if they can save you some money too – great. But, no matter what they say, you are definitely not numero uno! My recommendation is to consolidate your debt yourself. Find a great book on debt relief, talk to an accountant or a tax lawyer. Ask others who have been through this what they did. In short, you need to educate yourself. This is not terribly complex – the basic idea is very straightforward. Just remember – at the end of the day, for debt consolidation to work , you need to see real savings. Monthly savings and long-term savings.

• Is Debt Consolidation a real long term solution? The answer to this question is a definite maybe. A “yes” answer hinges on your financial maturity and willingness to change your spending habits once the credit cards are in the clear. The absolute worst scenario is one that you place all of your debt into a low-interest rate personal loan, but, keep spending on the credit cards just like before. Mentally, some will see credit cards with no balance and assume they’re rich – and spend like there’s no tomorrow. Soon, their debt level is so high there is no hope of recovery – just the ugliness and shame of bankruptcy. While others will sober up and change the way they spend money – living beneath their means, cutting up the credit cards and setting up a budget with the goal of never placing themselves in financial danger ever again. In this instance, debt consolidation is a good thing.