Credit Card Debt Elimination, New Age Con Jobs

July 8th, 2011 | Posted in Debt Relief

If you have lived long enough and spent the time to pay close attention you’ll notice that trends often come in cycles. What is cool now will probably be cool once again 10 years from now. Just look at all of the new fashions individuals are wearing these days. You may recognize some of them from your own youth, or the youth of your parents. This is the natural order of things. Men and women become crazed with something until it ultimately burns itself out, but when enough time has gone by someone decides to bring back those old trends to go for an additional round on a fresh number of people.

This procedure of cycles doesn’t limit itself to simply fashion. It can also be seen in other facets such as debt management. To understand this, you will need to understand the numerous varieties of debt relief. The oldest of those forms is Bankruptcy. This was designed for people who fell on tough times to avoid becoming shot, hung or sent to debtors’ prison. As time went on however individuals seen that this became a device that could be utilized and taken advantage of. Men and women would deliberately overextend themselves and when they reached their max capacity, they would seek bankruptcy relief and have everything wiped away.

For many years banks lobbied to have this changed. Around 1995 the bankruptcy abuse act was created. This put tougher rules on who could and couldn’t be able to get a chapter 7 bankruptcy. It put a bigger focus on a chapter 13 bankruptcy, which is really a repayment program where individuals could end up paying eighty percent or a lot more back to the lenders.

To balance out the losses they had been seeing from the rise in bankruptcies, the banks started to increase interest rates. After a while the interest rate caps rose to up to thirty percent or more. This put many individuals who had been still paying the money they owe either on a perpetual cycle of paying minimum payments and getting nowhere fast, or on the verge of falling behind. Because 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 permitted individuals to do is to stop using their credit cards and enter them into this program. The agency would seek to lower all of the interest rates then you’d make one payment per month to the agency who would distribute it 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 certainly much better than taking thirty or greater years. But, the downside was that the payment you had been doing was typically the exact same as your minimum payments in the first place, so in case you had been in a position where you had been about to get behind, then this wouldn’t stop this.

Once more with most things, individuals became greedy and as a growing number of individuals decided to ring up their credit cards then enter them into a CCCS program seeking 0 % interest charges forever, the credit card companies changed many of their guidelines. Many of them did away with 0 % interest rates or limited them to one year. They also began to reevaluate individuals after six months to a year, to ascertain if they still qualified for the program.

Next came the debt consolidation loan boom. As property values started to rise, lenders found a growing number of individuals with equity in their houses that could be tapped into. Thus began the home equity loan boom. A large amount of individuals started to tap into their houses equity and consolidate their debt into one reduced monthly payment. But once again greed started to take over. As the pool of possible people who qualified for conventional loans dwindled, the industry started to develop new ARM loans for people who wouldn’t have typically been able to receive a loan. This was the start of the housing crash. Just like any bubble, if you keep inflating and blowing it up ultimately, it’s going to pop. This is what happened. As these adjustable rate loans started to change, many of them tripled the interest rates forcing the property owner to get behind and in several instances lose their houses.

As you might know there are constantly likely to be those people who will make the most of people 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 cure everything from baldness to arthritis. These get wealthy fast type of individuals would sell this tonic to individuals anxious for a remedy. Often times really quickly, individuals would recognize that this was a scam, but not prior to many individuals would have fall victim to them. If the salesperson was not hanged, he would lay low, going from town to town until individuals forgot about him and the fact he was a sham, then he would pop his head up once again selling his snake oil to people who did not know it was a scam.

Just as these snake oil salesmen, you’ll find individuals within the credit card debt relief industry that try to make the most of individuals in desperate situations. One type of this get wealthy scam is what’s called debt elimination. The idea of this is that you simply hire an attorney who will attempt to sue the credit card companies stating that the debt isn’t valid. They try to make use of old loopholes within the law proclaiming that it is unlawful how they calculate interest rates, or forcing them to “prove” that is is your debt. Regardless of what these individuals tell you, ask yourself this one question. Did you charge the debt? Did you benefit from using the charge card by making purchases for goods that you owned? Unless somebody 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 response to that question is going to be yes. That being stated, you’re likely to be challenged to persuade a judge that the debt isn’t yours and you do not owe it.

The last type of debt consolidation program is debt negotiations. There are essentially two sorts of debt negotiations. The very first is referred to as Debt resolution. This is when you hire a law firm to negotiate with your credit card companies, for you, in an attempt to get them to agree to accept much less than your full balances. The main issue with this type of debt relief, it that in many instances the debt settlement attorney will charge a retainer in addition to a monthly legal fee upfront before any settlements have been achieved. This is typically on in addition to their settlement fees. Although it may appear reasonable to pay a law firm to legally represent you, what many individuals do not recognize is that the attorney will not represent you in court. The truth is, many of them will not even assist with answering the lawsuit. All they’re representing you for is to negotiate the debt and that’s it. So essentially you’re paying them extra to do totally nothing.

The other type of debt negation is referred to as debt settlement. As with the above example, this is where the debt is negotiated for much less than what you presently owe by a qualified debt settlement company with a confirmed track record. Just as with the lawyers you’ll find those debt settlement companies that can try to take fees upfront. Be mindful, it goes against current regulations. Any trustworthy settlement company will in no way charge you for their services before debt has been settled.

It truly doesn’t matter what type of debt relief you choose to go with, in the long run you will need to be well informed. A reputable company will do everything they can to make sure you know all of your choices and have a clear comprehension of all of them. They will not try to push you into anything and will go into great detail when examining your case. If you’re searching for debt relief, do your research and be sure you’re dealing with a company which is willing to follow the regulations, not charge you any fees until a settlement has been reached, and who will be sure that the option they offer is genuinely the best option for you.