Debt Help, Debt Consolidation Help Avoid Bankruptcy

The credit card industry's response to recent legislation designed to protect consumers from unfair practices and egregious fees and interest rates on credit cards has inspired some credit card issuers to raise rates and fees prior to the legislation taking effect in August 2009 and February 2010. If you're carrying credit card debt, now is the time to get debt help or make a plan for debt consolidation.

Debt Consolidation and Balance Transfers: Watch Those Fees!

US News & World report notes that several major credit card issuers are raising balance transfer fees. In the past, a three percent fee for each balance transfer was typical, but some companies are raising balance transfer fees to four or five percent of each amount transferred. If your credit is good enough to qualify for zero percent "teaser rates" on balance transfers for a few months, it can still be worthwhile to transfer balances from high APR cards. Using balance transfers judiciously can help you create your own debt consolidation plan without taking out loans requiring your home or car as collateral.

Getting Debt Help: "I Can't Afford My Minimum Payments!"

In addition to raising balance transfer fees, some credit card companies are increasing minimum monthly payments from two or three percent to as much as five percent of the balance owed. If you're carrying thousands of dollars of credit card debt, this increase can render your family budget "toast." Getting debt help through a credit counseling service may help in negotiating an affordable plan for consolidating debt and paying it off faster. Credit counselors work with you and your creditors to establish a repayment plan that may include waiving fees and reducing interest rates. It will also require closing your credit card accounts, but this is preferable to the consequences of filing bankruptcy.

Thinking Bankruptcy? Please Think Again

Collection calls and threatened lawsuits can drive consumers into filing for bankruptcy protection. Although filing bankruptcy provides legal protection from creditors, it has serious consequences. Before contacting a bankruptcy attorney, here are a few things to consider:

• Bankruptcy appears on your credit reports for seven to ten years and ruins your credit scores
• Your ability to rebuild credit will be limited due to poor credit scores
• You may have to wait several years to qualify for a mortgage loan or consumer credit
• High finance charges associated with post-bankruptcy credit can lead you back into debt
• A bankruptcy can even make you ineligible for certain jobs

Filing bankruptcy can impact your ability to get a job and car insurance, and should be used as a genuine last resort.

 

 

About the Author:
Karen Lawson started writing stories about birds and surfing at an early age. For more than ten years, she enjoyed a productive corporate career in mortgage banking before moving to Reno, Nevada in 1997. Karen earned BA and MA degrees in English (specializing in writing) at the University of Nevada. Significant areas of research and writing include truth and ethics in creative nonfiction, medical humanities, and the symbolism and lore of birds in American literature and culture. Karen has taught English at a community college, is writing a collection of poetry, and enjoys birdwatching and walking her basset hounds.