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Get Control Of Your Credit Card Debt

October 28th, 2008    Subscribe To Our Feed

Everyone has some credit card “fear” right now. With the shaky economy, the holidays fast approaching, pressing needs such as home repairs or medical bills, chances are you may be faced with a credit card (or two or three) that is close to being “maxed out”. Wondering if you will ever get this card paid back to a flexible and comfortable minimum amount is a real life “fear”. This article will give some advice on how to get control and limit your credit card debt.

First, realizing there is a problem is paramount. That is not as simple as it sounds as many people simply charge and charge and charge and want to confront the debt later. Well, this is later…now is the time to put a stop to this hole in your finances and get control of the credit cards in your wallet. Do not make the mistake of pushing the problem under the rug and thinking it will go away. It will not.

Next, make a list of all your cards and the amounts due and the dates due for each card as well as the interest rate on each card. Then put the list in order as far as the highest interest rate with the lowest balances. This list is going to be your first accomplishment in the road to credit card financial responsibility.

Now pick out one, two or three cards that you feel you should work on based on the lowest balances and highest interest rate. Take the number of cards, the minimum payments and the first due date of the card. The first due date is your target date. What is going to happen is, you will take the minimum balances and add another payment to this amount. Double the payments that are due in other words. If it is affordable to take three cards at once and make double the payments, that is fine. If not, then take the number of cards that are affordable and double the payments by the first due date that is your target date.

And, by the way, make sure that you are not fooling yourself in what can be afforded to put towards these credit card payments. There are very few things in your life that is as important as getting these credit cards under control. Maybe you should pack a lunch, combine trips out, put off purchasing that new skirt or outfit, do not buy that new purse, say “NO” to events that put you in a financial bind, and, in general, find ways to save a little more money to put towards paying off these debts. Making small sacrifices really does feel wonderful when the debt goes down and control of your spending and your debt is restored.

Go through the list of cards this way and make double the payments by saving in other areas of your life. It will not be easy. Take a month and write down every penny that is spent, the amount and the item being purchased. There will be many areas that can be cut back on and put that money towards paying off your credit cards.

The idea is to pay down the cards that are costing you the most in regards to interest rate. You will be more enthusiastic about saving money to put towards the debt when you see positive results this way. You can even chose cards that have the smaller balances if you feel you need that positive reinforcement of seeing the accounts becoming “paid off” faster.

Of course, clearly the cards must not be used for any additional purchases. Simply act like you do not own a credit card for a short time. You cannot spend your way out of this debt and you must stop the spending so that the payback procedures can work. Pay cash and remember how it felt before you had credit cards; it is really a great feeling.

Remember, even a small amount adds up when you are paying off your principle and not your interest. Think of it this way: Your minimum monthly payment is your “interest” and your extra payment is your “paydown amount”. You will soon be wanting to add more to that paydown amount as you see the balances dwindle. You will also realize that the effort is worth it as the cards start showing a more positive balance. It makes breathing a lot easier once the debt is under control and within being paid off. It soon becomes a fun game to find more money to apply to the debt as you see the results of your paydown efforts. Debt alleviation makes a person feel in control and more likely to keep debt within reason in the future.

Credit Card Debt and Debt Collectors

June 8th, 2008    Subscribe To Our Feed

As more and more people are finding themselves in a truckload of debt that they cannot cover, more and more are going through the unpleasant experience of dealing with debt collectors.

You may already be screening your calls and feel your blood pressure rising as you realize it’s them – again, not to mention how embarrassing it can be when they try and find you at your place of employment.

Who Are the Debt Collectors

Debt collectors can be employed by the companies themselves, people on contract to the companies or people employed by an actual collection agency. For many, they are paid on a commission basis, based on the amounts they collect. So while not every debt collector is unsympathetic and berating, many come off as aggressive as they are determined to collect their fees. So, it’s quite understandable while those who are already in a desperate state to fear encounters with such individuals.

Allowable Collector Actions

Debt collectors are allowed to contact you by in person, by mail, by telegram, by fax and by phone; at home or at work - unless they know your employer would disapprove. They may also not contact you before 8 a.m. or after 9 p.m. unless you have agreed to the contact at that time.

If you have an attorney they must contact him or her. They may then contact other people to find out your telephone number, work place or address, but in most cases they are only allowed to contact them once and they are not allowed to inform them that you owe money.

Stop Contact Request

Whether or not you actually owe a debt you can write a letter to the collector telling them to stop contact. From then, they may contact you only once to inform you that they will make no further contact or to tell you what action may be taken against you.

Stopping contact will not clear the debt. If you do not believe you owe the debt make that clear in your letter.

Your Rights

The FTC (Federal Trade Commission) has a Fair Debt Collection policy to protect consumers. As in anything knowing your rights is essential. Most collectors function on the assumption that you don’t know the law, so making it evident that you do will put off even the most determined collectors.

What Collectors Can’t Do

Debt collectors are NOT allowed to harass, abuse or oppress you or other individuals on your behalf. This includes the use of obscene language, threats of violence or repeated calling in an effort to annoy.

They cannot imply legal action, including seizing property or garnishing wages unless they are legally allowed and intend to do so.

They are not allowed to misrepresent themselves as government agents, attorneys or representing a credit bureau if they are not. They cannot imply they are sending legal documents if they aren’t or that you’ve committed a crime, if you haven’t.

You can find out more about your rights from the FTC. If you want to report an agent you can do so by contacting the FTC or your Attorney General.

Be Proactive

If you find yourself in the position of being late on payments, contact the credit card companies before your account hits the collection department to start working out a plan. If you however are already being contacted by debt collectors, educate yourself so that you can hold your own when in discussions.

Copyright © 2008 Credit Card Debt Solutions

Credits: Make Money Online | Matteo Turchetto | Andreas Viklund