Archive for July 28th, 2007
For any person, debt is like this illness that never goes away, it persists and persists, never truly getting better until action is taken. The comparison works because like an illness, debt can cause a great deal of suffering and pain to those who have trouble paying their bills each more, or at all. Immunity against debt is non-existent, everyone is susceptible. Debt can go beyond simply the inability to pay bills on time, it can literally cause both physical and mental health problems.
Otherwise, honest people who are in debt have resorted to stealing, cheating, and lying in efforts to hide or eliminate their debt. The feelings it causes, it is enough to drive anyone insane. Those suffering from debit will likely feel a combination of shame, depression, embarrassment, anger, and anxiety. While physical and emotional problems occur out of massive debt, other negative side effects occur as well.
What are the other negative side effects? They include:
Bankruptcy
Although unfortunate, thousands of people daily need to file bankruptcy, seeking protection under the law. There are three types of bankruptcy, Chapter 7, Chapter 11, and chapter 13. Though it can be a long, drawn-out, and trying process, sometimes bankruptcy can actually help someone in debt get the relief and start they need to come out of debt once and for all.
Eviction
A person in debt may face eviction from their home because they have the inability to pay rent on time each month. Renters who do not pay rent each month will likely find themselves in a situation in which the property owner needs to evict them.
Wage Garnishment
To add to the lack of available money each month, creditors may sue and seek a judgment to have your wages garnished. Essentially, the judge has given your employer an order to make the payment directly out of your paycheck to the creditor you owe. This is money you will never even see, because it comes out instantly.
Foreclosure
Just as if you had trouble paying rent, if you have trouble paying the mortgage, foreclosure is a real possibility. The trouble with foreclosure is that you lose your home. This is one of the most common problems faced for those with bad debt.
Emotional Troubles
Even the happiest of people can find the pressure and embarrassment of debt too much to handle. The press is relentless, it starts with mail and telephone calls from creditors at all hours of the day or night, then it can lead to losing their possessions, such as their car, apartments, or homes.
Suicidal Tendencies
It is a very sad fact that sometimes those suffering from intense debt commit suicide because debt has caused this so many troubles in their lives. Their inability to eliminate their debt drives them to thinking suicide is the only way out.
As you can see, debt can have a real impact on a person’s life. The negative effects doesn’t stop there either, debt will remain on the credit rating of the person for at least seven years. Debt comes at an extremely high emotional and financial cost.
Debt starts out as a good thing, allowing us to live the life we may not otherwise be able to live. However, in some cases, it has the ability to take control and negatively influence your life.
July 28th, 2007
The simple answer to a complex question is YES. Debt settlement is a legal solution used by thousands of Americans to help them avoid bankruptcy. The theory behind debt settlement is very simple: negotiate deals with credit card companies that are mutually beneficial for both parties. This ultimately leads in the credit card company receiving a lump sum payment, and the consumer paying off the entire debt for a percentage of the outstanding balance. The greatest advantage for the credit card company is that they avoid any future problems with collecting on the debt, and any concession made on the creditors part is most obviously tax deductible. The consumer is at no time breaking any laws or committing any illegal acts.
So, if the answer is so simple, then why is the question so complicated? The problem with debt settlement is not the legality of the practice, but the ethics of those who practice it, namely debt settlement companies. Unfortunately, a number of unethical debt companies have been found to take advantage of consumers financial strife to boost business. They essentially promise clients unrealistic results and then charge them outrageous administration fees for services they never provide. Thus, we see that legislation is not so much to protect credit card companies, but in fact to protect unknowing consumers. For this reason, a number of states are requiring debt settlement companies to complete forms and register activity with the states Attorney General in order for them to be more easily tracked. This helps the government to identify unethical companies in a legal and ethical industry. The idea is to eliminate those companies that have
So, if you are considering joining a debt settlement program, relax! What you are doing is legal, ethical, and morally correct; just make sure that the company you chose is also!
July 28th, 2007
Debt is a slippery slope and it only goes in one direction down! Many people have found themselves on it and some have unfortunately slid all the way to the bottom where bankruptcy, bailiffs, repossession and unemployment await. Others, thankfully, addressed the problem in time and avoided such an outcome. So what did they do that the others did not? They sought out free debt advice that allowed them to get back in control of their finances and back onto level ground.p>
One of the first things they will have done is to make a list of their debts, separating them into priority debts and non-priority debts. Priority debts are things like your mortgage, utility bills and council tax. Non-priority debts include credit cards, store cards and personal loans. Priority debts need dealing with first as the consequences of not paying them are much more serious than the non-priority debts.
Now you have a list of your debts, you need to work out how much you can afford to pay. This can be done by deducting your essential expenses (Food, clothing, mortgage/rent, utility bills, council tax, insurance, travel expenses, childcareetc) from your earnings. The amount you have left over can be used to pay your non-priority debts.
If you do not have anything left over, or you do not have enough to even pay your essential expenses you should seek professional advice immediately. A good place to start would be the Citizens Advice Bureau public information website.
If you do have some money left over, but not enough to cover the minimum payments on your debt the next step is to contact your creditors to negotiate reduced payments. This may sound daunting and unrealistic, but you may be surprised at how much you can achieve. If you are honest and demonstrate a willingness to pay back what you owe you should be able to negotiate successfully. It is also important to ask your creditors to freeze the interest on your debts otherwise your debt will continue to grow and take longer to repay.
Of course, there are other options. If you do not feel comfortable contacting creditors yourself, you can seek the help of a debt management company who will negotiate on your behalf. Besides having many years experience, debt management companies have often built up good relationships with creditors and can thus succeed in negotiating better terms. Be wary that some debt management companies charge for their services, only adding to your debt. Make sure you seek out one of the many who offer their services for free.
If debt management is not for you, some other options you could choose are:
Debt consolidation - A method of replacing multiple debts with one loan. Your debts are easier to manage and you can often get a better rate.
IVA - An IVA is a legally binding agreement between you and your creditors. If you qualify for an IVA, you can write off all the debt you cant afford.
The solution you choose is completely dependent on your circumstances and what is best for you. The key is recognising the debt problem and addressing it.
July 28th, 2007
