A Problem Called Credit Card Debt
Credit cards are no more a luxury, they are almost a necessity. So, you would imagine a lot of people going for credit cards. In fact, a lot of people posses more than one credit cards. So, the credit card industry is growing by leaps and bounds. However, the credit card industry and credit card holders are posed with a big problem called ‘Credit Card Debt’. In order to understand what ‘credit card debt’ actually means, we need to understand the workflow associated with the use of credit cards as such.
Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card is a representative of the credit account that you hold with the credit card supplier. Whatever payments you make using your credit card are actually your borrowings that contribute towards your credit card debt.
Your total credit card debt is the total amount you owe credit card supplier. You must settle your credit card debt on a monthly basis. So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You must pay off your credit card debt by the payment due date failing which you will incur late fee and interest charges.
However, you have the option of making a partial (minimum) payment too, in which case you don’t incur late fee but just the interest charges on your credit card debt. If you don’t pay off your credit card debt in full, the interest charges too get added to it. So your credit card debt keeps on increasing, more so because the interest rates on credit card debt are generally higher than the interest rates on other kind of loans/borrowings. Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount.
If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last month’s interest too. Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a big amount which you find almost impossible to pay. Moreover, if you don’t still control you’re spending habits, your credit card debt rises even faster. This is how the vicious circle of credit card debt works.
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Think you’ve got it bad with the fees your credit card charges you? Well try this: $247 up-front, for a $300 credit line… And that’s not the worst of it!
Help answer the question about credit card debt
Who is responsible for credit card debt if somebody dies? Or does the company eat it?
Say somebody has X amount of credit card debt, then they die but still have that debt to the credit card company outstanding, what happens? Does the company have to write it off as bad debt or ? Perhaps the company can hit up that person's estate. But let me pose another question then – what if that person's estate does not have enough money to cover that credit card debt.
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Uchenna Ani-Okoye is an internet marketing advisor and co founder of Free Affiliate Programs
For more information and resource links on credit visit: Bad Credit Student Loan
Comments
The problem is that debt is now profit able and all economies (even if one day they collapse) run in cycles.
A hunge majority of students aren’t supposed to be in debt. You can just live near campus. No need for a laptop/ iPod/ car/ TV/ high phone bills. etc etc…. I’ve seen a lot of liberal arts majors with the latest Mac laptops. Makes no sense.
A community is supposed to invest in their future. Education is an investment in the future of society.
Why in the hell are kids having to pay for their education in the first place?
Answer: economic stimulation.
Going to college is not worth creating debt with an unmerciful government. Sometimes, health issues and certain upcoming mental and physical disabilities will prevent a person from making enough money, if any, to barely survive on, but the government will still take their money! You can’t take bankruptcy! You’re trapped permenantly. There’s no mercy! No forgiveness of debt. Financial slavery! Don’t be fooled. A job’s not promised at the end of your education. Education doesn’t equal prosperity.
Do's when closing credit card accounts
Close unused and idle credit card accounts. Doing so prevents your from being a victim of identity theft and from being charged annual fees for unused cards.
Cancel credit card accounts with current balances that you want to pay off and no longer use. If don't want to use a credit card anymore, you can close the account and then concentrate on paying off the balance. This strategy keeps you from spending more on that account and lowers your amount of available debt when applying for a loan.
Ensure you still have several credit card accounts open. Keeping several credit card accounts open will keep your credit score and debt balances healthy. Creditors view signs of activity and responsible credit use positively. However, you must use these credit card accounts responsibly or you could find yourself suffering from a poor credit rating.
Have one card designated for regular use and pay it off each month. This one card can be reserved for everyday spending while your other credit cards can be used for emergency or specific purposes, such as vacations, business trips, etc. By paying off this one card each month, you won't need to worry about carrying a balance when using the other cards for higher-priced items.
Check your credit report. After closing an account, check your credit report to ensure that the accounts have been marked as closed and to determine whether there are any errors. Look for late payments, high balances and signs of identity theft.
Destroy canceled credit cards. It is important to cut up closed credit card accounts by cutting through the account number. This prevents someone else from stealing your credit card and reopening the account.
Don'ts when closing credit card accounts …
Don't close your oldest credit card account. This could cause your credit history to appear shorter and could harm your credit score. Better to keep the account open and not use it or just use it infrequently. If you want to close it because of a higher interest rate, contact the credit card company to see about lowering the APR.
Don't expect credit card accounts to close automatically. The only way an account is closed is if you contact the credit card company and ask, preferably in writing, to close the account. Contact their customer service department if you need its mailing address. Typically, the card issuer will confirm that the account is closed within 10 to15 days.
Don't be pressured into canceling several accounts at once. It is better to gradually pay down and then close the accounts if you are unsure about the impact doing so will have on your credit score or you are uncertain as to the amount of debt you need to carry. You may need those credit cards again in the future.
Avoid over-consolidating balances onto one card. If your credit balances rise to above 50 percent of your available limits, you may see a drop in your credit score.
Stay Strong this too shall pass
Yes esp in a country that allows schools to be run like a business. They are not required to teach you anything yet can pocket 20’000 per student! Insane.
What did you spend the credit card money on? Can't you sell it on eBay or pawn it?
As much as I hate debt collectors, $450 doesn't seem like an awful amount to pay.
Of course the credit card industry needs to be regulated. That will come after the current credit crisis reaches its peak. Banks are nervous because the default rate is climbing.
There are some weird things about this story that I am not sure about.
First off, I've never heard of a 19 year old with a 722 credit score, especially with that kind of credit card debt.
Secondly, how does an 18 year old student with no credit suddenly get credit limits that allow him to spend $27K over the course of a single year?
Third, if you have no money I again wonder how you convinced these credit card companies to loan you that kind of money in the first place.
But ignoring these strange anomalies for a moment, the best thing I can suggest is getting with one of those debt management services. They will help you to negotiate lower interest rates and a pay off scheme to get out of debt. Max out on those student loans because the interest rate is way lower than credit cards. Pay your way out of this.
It's going to take time, and its going to take effort, but eventually you will pay it off.
There have been cases in the past where a good lawyer sues the credit card companies for 'allowing' a person to get in this much debt through illegal gambling. Sports betting is probably the most illegal of all online gambling. Most of it is really not even considered illegal, even after the change in the law. But sports betting is specifically mentioned in some 1960s telephone betting act, and can often be argued as pertaining to Internet gambling.
So maybe with a good lawyer you can argue that you were a naive young idiot, suckered into a gambling addiction facilitated by the credit card companies, who were illegally participating in online gambling. With a good lawyer you might get away with it. The issue becomes how you pay them. Unless you want to get really cocky and sue them for a few hundred grand for all the pain and suffering they have caused you.
Finally, that guy who answered earlier is correct. These days if you file bankruptcy the credit card debt still follows you. Thanks to lovely Mr. Bush, the new law basically takes our tax dollars that fund the court system, and has the court system act as debt collectors for the multi billion dollar credit card industry. So unlike before when credit card companies were SOL, now they have a free debt collection agency run by the government collecting their bad debts. It's a win win for them.
So if you file bankruptcy, there is a very good chance you will not only ruin your credit but you will still end up paying back all that money.
Whatever you do, stop the sports betting. You have clearly demonstrated that you suck at it. You might just as well have spend $27K on the lottery.
I wouldn't recommend a credit counseling agency unless its absolutely necessary. But it may be necessary to avoid bankruptcy.
In all honesty, your credit card balances are really low. The credit card companies know people are having trouble right now, so it's not like you're the first or anything. So here's what I would do.
Send a letter to these companies telling them of your financial hardship. Explain that your husband is in the military and you are doing the best you can. Ask that they lower the interest rate as far as they can so that you can work diligently at getting these cards paid in full. In the meantime, you will make a monthly payment of $10, $15, or $20 a month.
Send this letter along with your first payment to them. Then every month mail them SOMETHING. Even if it's just $5.00, anything is better than nothing. And STOP using the cards.
As long as you're making an effort and sending consistent payments they should back off.
It’s personal responsibility, bottomline. The system was created to enslave people with debt. I go to school fulltime and work fulltime and its hell, but I owe nothing and have no debt becuase I pay right away. The credit card companies hate me ;D
I am 55 years old…..it used to be very hard to get a credit card. When I was 25 years old I tried to get credit cards for about 2 years with no luck ….and I had been working full time for 5 years at the same company. Finally I lucked out when Amoco Oil Co. sent me an invitation for their gas card. After I used it for a year THEN it was easy to get a Visa or mastercard
You can only get them to remove inaccurate information, and then you must wait. A letter from you will only be attached to your record. You may be correct, but the best you can do it to pay off now, and then when you know when your FICA is updated, then get the record of it and apply.
This is like pushing on a string. You won't get anywhere. The credit bureaus are not equipped to respond to each and every phone call, except in the case of fraud or stolen credit or stolen ATM cards.
do you trust her to drive your car?
If so have her sell the car to you for $1.00 and put the car in your name.
Since social security is NOT able to be garnished, she is judgement proof at that point if that is her only income.
Change her number to an unlisted number and forward her mail to your address. If you see her once a week give her the non bill related mail and get her permission to screen the rest of it.
Do not ignore the courtdate since she is judgement proof there is nothing that they can do to her so let the bill collectors cry in their beer.
I am curious as to why she would run up bills that she can not pay. This might be a sign of her deteriorating mental health and as such she might need a person to supervise her finances!
College is an investment. All investments involve RISK. The risk is that you will ruin your life with student loan and credit card debt and get an education that’s worth next to nothing.
Try this program that costs $10 per month to participate as seen on YouTube “STUDENT DEBT KILLER”
Good question.
While it's true that it can trash your credit, after 4-5 years these old collection accounts have little effect on your score.
The trick to this is to negotiate pay for delete agreements with these collection agencies so the negative mark is removed if you pay. If they won't agree to delete the listing, don't pay it. No reason to pay the debt and have your score trashed.
Edit – Robert is correct for the most part in stating that the SOL does not negate the debt. However, there are a couple states in which the expiration of the SOL will extinguish the debt, unfortunately I don't have the list in front of me though.
Also, if you send the collection agency a cease and desist letter then by law they cannot contact you any further. Now if the SOL has expired, and the 7 year reporting period is over you can send the C&D which will effectively cut the legs out from under the collection agency as they have no means to collect the debt. Their only recourse would be to sell the debt to another collection agency, but another cease and desist letter will cut them off too.
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