Money Does Matter

Informal bankruptcy, what is that? Essentially it is stopping the payment of certain debts to strengthen one’s financial position without going through a formal bankruptcy proceeding.

Yes, that means on the surface informal bankruptcy offers no protection from creditors. But, it is important to make the distinction between secured and unsecured creditors. By stopping payments to unsecured credit card banks to eliminate credit card debt, you are strengthening your financial position to pay secured creditors, like home mortgage banks and car loan holders. Those holders of secured loans are the ones who have the best legal recourse to reclaim what you owe them.

The Federal Reserve Bank requires credit card banks to reserve money for bank debts. They operate under the assumption that some people will not be able to repay their debts, and their toothless debt collection efforts reflect that assumption. They threaten credit card debt lawsuits and promise bad marks on credit reports, then pass charged off debts onto outside debt collectors.

When the credit card banks pass their debts onto collection agencies or collection attorneys, those entities increase the pressure on consumer debtors. But collection agencies and collection attorneys are relying on threats and legal firm letterhead to scare debtors into showing weakness or capitulating to their demands, according to the Credit Card Debt Survival Guide. Collection agencies or collection attorneys work on commission. They are paid 30 percent of what they collect by their credit card company clients. From their experience, they do not expect to collect from everyone. Instead they focus their energies on the most susceptible debtors.

Junk debt buyers usually buy credit card debts from the credit card banks for less than 10 cents on the dollar within a year of their discharge and after the banks’ debt collectors have been through the accounts for collection opportunities. Debt collectors for junk debt buyers make larger commissions about 50-60 percent. They are more opportunistic and avoid debt savvy consumers who are difficult to collect from, according to the Credit Card Debt Survival Guide.

According to the Credit Card Debt Survival Guide, becoming educated about debt collection laws and consumer rights is the way to succeed with informal bankruptcy and to eliminate credit card debt. Good written responses to debt collectors are important and cause collectors to pursue other more vulnerable debtors.

You are invited to learn about the many strategies to eliminate credit card debt; some for those who can pay, some for those who cannot pay. Read all about them in the 230-page Credit Card Debt Survival Guide www.credit-card-debt-survival.com

Many consumers, who cannot afford to pay high monthly minimum credit card debt payments and cannot afford to settle those debts, condemn themselves with their feelings of guilt to being tormented by credit card debt collectors.

Some consumers in this situation realize they do not have to suffer this financial death by guilt and that they can take positive action to eliminate credit card debt they cannot afford to pay.

The first step to overcoming that guilt, according to the Credit Card Debt Survival Guide, is disputing and denying the debt any credit card debt collector, other then the original creditor, calls about. Not admitting to an unsecured credit card debt and denying it is a legal strategy which forces the other side to properly document their claim, or drop it. It is not an indication of character. All it means is that the other side will have to prove that they have a case.

Credit card debt collectors must, according to the Fair Debt Collection Practices Act:

1. The debt collector can assume that the debt is valid if the consumer does not dispute the debt’s validity.

2) Says that the consumer must dispute the debt, in writing, within thirty days of dispute.

The Fair Debt Collection Practices Act also allows consumers to write to the credit card debt collector stating that they refuse to pay the debt, or that they would like the debt collector to stop all communication regarding the debt.

Then what happens, when the consumer disputes and denies a credit card debt and instructs collection communications to cease when a collection attempt is made by a credit card debt collector? Their job has been made harder. They must validate the debt with copies of original documents. That means going back to the credit card company for documents, then forwarding them to the consumer.

According to the Credit Card Debt Survival Guide, for an unsecured, unsigned credit card debt, the first thing a credit card debt collector must do is to get the consumer to admit to the debt; to take ownership of it, to admit “guilt.” That one exchange between the consumer and the credit card debt collector sets the tenor for the rest of the debt collection communications between the two. But, if the consumer denies and disputes the alleged debt and forbids further communications, the collector will likely move on to an easier target.

If you want to eliminate credit card debt, read about proven strategies for settling debts and handling debt collectors as well as collection attorneys in the Credit Card Debt Survival Guide. www.credit-card-debt-survival.com

When people cannot pay their credit card debt, they are overwhelmed. They are susceptible to bad advice from debt service firms and even attorneys. Most attorneys only know one solution to debt . . . bankruptcy. But, all is not lost, because resistance is NOT futile. Debt collectors and collection attorneys work on commission and they would rather spend their time with uninformed consumers who submit to their demands.

Of the several choices available, non-payment is THE best choice when you cannot pay credit card debt. Consider the choices:

Non-payment with No Resistance Many individuals are convinced they are helpless and cannot do anything about their financial problems. This group does not respond to debt collection notices or court summonses and each is put at risk by exactly what they may fear the most.

Bankruptcy For obvious reasons bankruptcy is the worst alternative if a consumer only has unsecured credit card debt.

Lump Sum Debt Settlement/Negotiation Credit card accounts charge-off after six months. Each charge-off will be on a credit report for seven years. Will six monthly payments be enough money to settle with? Debts are frequently sold to junk debt buyers after they charge off. Then, it is not worth attempting to settle with the credit card company. Junk debt buyers are best defeated like debt collectors, according to the Credit Card Debt Survival Guide. Many states have been cracking down on debt settlement firms. A reputable firm is hard to find.

Credit Counseling or Debt Management with a Negotiated Reduced Payment Plan These programs have a low success rate, currently under 10 percent according to the Association of Independent Consumer Credit Counseling Agencies.

Non-payment by Resisting Debt Collectors Everyone in the know knows that debt collectors have no real power beyond lies and threats, and many, many sources indicate that a credit card debt lawsuit is unlikely for most people, according to the Credit Card Debt Survival Guide. Credit damage with non-payment is no worse than any other alternative. Junk debt buyers can be fairly easily removed from credit reports, and in time credit can be repaired.

Debt collectors do not have to collect from 100 percent of debtors. 30 to 50 percent is more like the average. Debt collectors simply DO NOT collect from those who know how to resist them and eliminate credit card debt.

You are invited to learn how to eliminate credit card debt. Read the complete 230-page Credit Card Debt Survival Guide www.credit-card-debt-survival.com

Debt settlement firms call for a minimum of $10,000 in credit card debt. Of that $10,000 you have to give them $1500-2000 in upfront fees for them to settle your debt. To save money for a lump sum settlement and their fees and to eliminate credit card debt, they tell you to stop making credit card payments and to give that money to them for their fees and for an eventual lump sum settlement.

If the debt settlement firm says they can get a $5000 settlement for that $10,000 of debt, how long will it take you to saves $7000, which includes $2000 in fees? What happens if they cannot settle with your credit card company? What happens to the account that has not been paid? What happens to the money paid to the debt settlement firm, and what about your credit rating?

$500 a month will total $7000 after 14 months of payments to the debt settlement firm. At that pace it will be over one year before $5000 can be paid (after $2000 in fees is taken)in a lump sum to end the debt. But, that debt may no longer exist because the banks charge off unpaid credit card debts after six months. Then within the year, they sell those bad debts for about 10 cents on the dollar.

What that could mean for you is a junk debt buyer has purchased your account for 10 cents on the dollar before it has been settled. Now, the bank has no incentive to remove their bad-debt listing from your credit report, a mark that will be on your report for seven years.

If you are prepared, you can handle the junk debt buyer’s collection efforts, according to the Credit Card Debt Survival Guide. But if you have placed your trust in the debt settlement firm, you can be blindsided by a junk debt buyer and threatened with a court summons and possibly even be served one.

So, the debt collectors are at the door. That debt is obviously not settled. The settlement fee is used up. Your credit is tarnished. But, you still have $5000, if, and a big if it is, the settlement firm put the money in a third-party escrow account. And, they did not eliminate credit card debt for, as promised.

You are invited to learn more about how to eliminate credit card debt, whether you can afford to pay or not, read theCredit Card Debt Survival Guide. www.credit-card-debt-survival.com