Jul 11
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If you have lived long enough and spent the time to pay close attention you may notice that trends often come in cycles. What is cool now will be cool again 10 years from now. Just look at all of the new fashions men and women are wearing nowadays. You might recognize some of them from your own youth, or the youth of your parents. This is the natural order of things. Folks grow to be crazed with something until it ultimately burns itself out, but once sufficient time has gone by somebody decides to bring back those old trends to go for yet another round on a fresh set of people.
This method of cycles doesn’t limit itself to simply fashion. It may also be observed in other facets such as debt management. To understand this, you need to understand the different types of debt relief. The oldest of those forms is Bankruptcy. This was designed as a way for individuals who fell on hard times to prevent becoming shot, hung or going to debtors’ prison. As time continued however individuals realized that this became a tool that might be utilized and exploited. People would deliberately overextend themselves and once they reached their max capacity, they would file for bankruptcy and have all of it wiped away.
For many years financial institutions lobbied to have this changed. About 1995 the bankruptcy abuse act was created. This put stronger rules on who could and couldn’t qualify for a chapter 7 bankruptcy. It put a bigger focus on a chapter 13 bankruptcy, which is actually a repayment program where people could wind up paying 80 % or far more back to the creditors.
To balance out the losses they had been seeing from the increase in bankruptcies, banks began to boost interest levels. After time the interest rate caps raised to up to thirty percent or more. This put many people who were still paying their debts either on a never ending cycle of paying minimum payments and getting nowhere fast, or on the verge of falling behind. Out of this the consumer credit counseling program arose. In many instances these agencies were run, or at the very least backed by the finance institutions themselves. What this enabled individuals to do is to stop making use of their credit cards and put them into this program. The agency would try to lower all of the interest rates then you’d make one payment per month to the agency who would distribute that out to the creditors every month.
The good part with this program is that you were able to pay down the debt in 5 to 6 years. That is naturally much better than taking 30 or more years. But, the downside was that the payment you had been making was normally the exact same as your minimum payments in the very first place, so in the event you were in a situation where you were about to fall behind, then this would not avoid this.
Again with most things, folks became greedy and as increasingly more individuals decided to ring up their cards then enter them into a CCCS program seeking zero percent interest charges for good, the credit card companies changed many of their procedures. Many of them did away with zero percent interest levels or limited them to a single year. Additionally they started to reevaluate individuals after six months to a year, to find out if they still qualified for the program.
Next came the debt consolidation loan boom. As property values started to rise, lenders discovered increasingly more people with equity in their homes that could possibly be accessed. Therefore began the home loan boom. Thousands upon thousands of folks started to utilize their houses equity and consolidate their debt into one low monthly payment. But once more greed began to take over. As the pool of potential individuals who qualified for conventional loans dwindled, the industry began to produce new adjustable rate loans for people who would not have typically been able to receive a loan. This became the start of the housing crash. Just like any bubble, if you keep on inflating and blowing it up eventually, it’s likely to pop. This is what happened. As these adjustable rate loans began to alter, several of them tripled the interest rates making the property owner to get behind and in several cases lose their homes.
As you may know there are always going to be those people who will take advantage of individuals who are in dire straits. We commonly call these individuals “snake oil salesmen” coined from the early years when individuals would sell fake potions to remedy almost everything from thinning hair to arthritis. These get wealthy fast type of folks would sell this tonic to individuals eager for a remedy. In many cases quite quickly, individuals would realize that this was a scam, but not before many individuals would have become victim to them. If the salesperson was not hanged, he’d lay low, traveling from town to town until men and women forgot about him and also the reality he was a sham, then he would pop his head up once again selling his snake oil to individuals who didn’t know it was a scam.
Just like these snake oil salesmen, you’ll find men and women within the credit card debt relief industry that try to make the most of folks in desperate situations. One type of this get rich scam is what’s called debt elimination. The idea of this is that you hire a lawyer who’ll attempt to sue the credit card companies saying that the debt is not valid. They try to use old loopholes within the law stating that it is illegal how they calculate interest rates, or forcing them to “prove” that is is your debt. No matter what these men and women tell you, ask your self this one question. Did you charge the debt? Did you benefit from using the card by making purchases for goods which you owned? Unless someone stole your card and made purchases you didn’t know about, or the bank added charges to your bill that belongs to another individual, in most all instances the answer to that question is usually yes. That being said, you’re going to be hard pressed to persuade a judge the debt is not yours and you do not owe it.
The last type of debt consolidation program is debt negotiations. There are basically two types of debt negotiations. The very first is known as Debt resolution. This is where you hire a lawyer to negotiate with your collectors, for you, in an attempt to get them to agree to accept much less than your full balances. The key problem with this type of debt relief, it that in many instances the debt settlement attorney charges you a retainer along with a monthly legal fee in advance before any settlements have been reached. This is generally on top of their settlement charges. Even though it may appear reasonable to pay a lawyer to legally represent you, what lots of people do not recognize is that the law firm won’t represent you in court. Actually, several of them will not even assist with answering the summons. All they are representing you for is to negotiate your debt and that’s it. So essentially you are paying them additional to do completely nothing.
The next form of debt negation is known as debt settlement. As with the above example, this is where your credit card debt is negotiated for less than what you currently owe by a qualified debt settlement company with a confirmed background. Just as with the law firms you will find those debt settlement companies which will try to take fees in advance. Be mindful, it goes against current regulations. Any reputable settlement company will never charge you for their services before debt has been settled.
It truly does not matter what type of debt relief you decide to go with, ultimately you will need to be properly informed. A reputable company will do everything they are able to to make sure you know all of your choices and have a clear understanding of all of them. They won’t attempt to push you into anything and will go into great detail when looking at your case. If you are looking for debt relief do your research and make certain you are dealing with a business that is willing to follow the regulations, not charge you any fees until a settlement has been reached, and who will make certain that the choice they supply is truly the very best choice for you.