Real Time Debt Statistics – The U.S. Debt Clock
Posted: February 22, 2011
Filed Under: Observations
Forget about Facebook, YouTube and Twitter for a moment. Here’s a fascinating site to check out when you need a 5-10 diversion: www.USDebtClock.org
Here are just a few of the statistics it tracks:
- U.S. National Debt
- Debt Per Citizen
- Debt Per Taxpayer
- Debt Per Family
- Savings Per Family
- Total Personal Debt
- Mortgage Debt
- Consumer Debt
- Credit Card Debt
This list just barely scratches the surface. You’ll find WAY more statistics when you visit the site.
Also, each statistic on this site includes a reference for further research if you’re interested.
Coping With The Fear And Shame Of Debt
Posted: February 4, 2011
Filed Under: psychology of debt
I came across a great article yesterday on The Huffington Post about how people are coping with debt. The headline that originally attracted me to this article was, “The American Dream Is For Sh*t“, so I just had to check it out.
The article focuses primarily on people that got behind on their mortgages, and their thought processes and emotions as they dealt with their financial problems. What I found interesting is that people with mortgage problems were experiencing nearly the same feelings and anxieties as people with credit card debt problems. The similarities were uncanny.
For example:
Although researchers find that some underwater borrowers who could continue paying their mortgages strategically default anyway, the vast majority continue to pay. Many homeowners, out of a combined sense of fear, shame, courage and morality, resist making what is otherwise a logical financial decision.
Walking away from a home, however, is more than the sum of a few business decisions. For many homeowners, it’s either an act of civic defiance against a system they no longer buy into or the end result of being shuffled around by institutions that don’t help them solve their financial problems.
The article further went on to say:
The hostility people felt from their banks made the decision to walk away easier for many, and some now even revel in it, celebrating a break from a system they see as rigged against them. “We get daily calls from creditors and banks that threaten this and that, and I just laugh knowing I am helping to bring down the system that has brought us all down and continues to reap giant profits at the expense of the little guy,” said one. Others are still haunted with shame by the decision. Most said they felt a mix of both.
Many of the homeowners said they felt alone and powerless in their interactions with the banks and were curious to hear what other people in similar situations had to say. “There should be support groups for people who have to deal with these banks,” said Richmond Burton, 50, a soon-to-be-former resident of Long Island’s East Hampton. “It can drive you crazy. I’m very good at dealing with pressure, and they made it feel like you’re at their mercy.”
In speaking one-on-one with several thousand people over a period of 15 years in various levels of financial distress I can say without a doubt that most folks are good, honest, decent people that want to do the right thing and honor their financial obligations. No one ever thought that someday they wouldn’t be able to pay their bills. However, when reality hits, it can be a terrifying experience.
Hearing about how other people dealt with their financial problems can be very comforting. Yes, you’re still going to need to address your financial challenges. But at least you know that you’re not alone, and many others are (or were) in the same boat as you.
If you’re having financial difficulties right now, I strongly recommend that you check out this entire article ASAP. It’s worth it. Here’s the link:
The American Dream Is For Sh*t
Bankruptcy vs Settlement – Which is better?
Posted: January 25, 2011
Filed Under: Answers To FAQ
There are several things to consider when you are trying to decide between bankruptcy vs. settlement. The first of which is whether your debt is secured or unsecured.
Unsecured Debt
Unsecured debt is money owed for medical bills, department store credit cards and regular credit cards. They’re not secured by an underlying asset or security. A good rule of thumb to distinguish between secured debt and unsecured debt is whether a creditor can take back any property to satisfy the debt.
If handled correctly, many times a creditor will accept 50% of the total amount or less to satisfy the outstanding balance — sometimes going as low as 25-30% of the outstanding balance. It all depends on the creditor or collection agency you’re dealing with and their individual policies and parameters.
Keep in mind that discounted lump sum settlement normally only apply to unsecured debts.
Secured Debt
Secured debt is money owed on a vehicle, home or other personal property that can be repossessed (or liened) to satisfy a past due amount.
In addition, child support, alimony and student loans can usually be treated as secured debt in most cases even though no property is attached. Reason being, child support, alimony and student loans are difficult, and in some cases impossible, to discharge in bankruptcy. For this reason, these debts are usually treated as a secured debt.
Bankruptcy As A Last Resort
Bankruptcy can remain on your credit report for up to 10 years. Bankruptcy is also a matter of public record for anyone that wants to know. For some people this is a big deal, for others it is not.
For those who work in a sector that requires a security clearance or background check, this could put their jobs in jeopardy.
Filing bankruptcy also requires that you appear in Federal Court for one or more hearings.
It has been found, however, that by far the biggest reason that people do not wish to file bankruptcy is a matter of personal responsibility. In other words, the moral obligation to repay the debt. Most people are good, decent and honest and want to do the right thing when possible.
The Truth About Credit Card Debt Settlement
It’s true that settlement can be a good alternative to bankruptcy, but here are a few things you should know:
1. Regardless of what people might tell you, it is usually going to take months to reach a settlement with your credit card company. In many cases, a credit card company will not offer much if any settlement until your account is at least 4-6 months past due.
2. Your credit score will get damaged. This is the trade-off for substantial debt relief without the need to file bankruptcy.
3. You will continue to receive collection calls. Unfortunately this is a by-product of going through the debt settlement process. However, it’s not the end of the world and it will usually only be for a few months of your life.
Lastly, you can take the do-it-yourself approach to debt settlement or you can hire an experienced firm to assist you. People have achieved very good results with each method. It all depends on your negotiation skills, time available for this project as well as your comfort level in talking with debt collectors.
For more information on this topic, please visit:
http://www.hoffmanbrinker.com/faq-debt-settlement.html
http://www.hoffmanbrinker.com/videos
Telemarketing Sales Rule (TSR) To Regulate Debt Settlement Companies
Posted: October 25, 2010
Filed Under: Answers To FAQ
On Oct. 27, 2010, a new law called the Telemarketing Sales Rule (TSR) becomes active. This rule is designed to keep debt settlement companies from charging exorbitant upfront fees for their services. In addition, this rule will make debt settlement companies wait until a debt has actually been settled before they can collect their fees.
The TSR will also require that debt settlement companies offer full disclosure to clients seeking help. For example, they must inform prospective clients that they will continue to receive collection calls during the process, and that no specific results are guaranteed and that the client’s credit report will be adversely affected.
Certain debt settlement companies will also need to clean up their advertising as well. No longer can they advertise that they routinely settle debts for pennies on the dollar. I’m sure you’ve seen these misleading ads on TV, radio and in magazines.
Why This Law Was Needed
With the difficult economy of the past few years, many people found themselves facing serious financial difficulties for the first time in their lives. I’m talking about good, honest, decent people not being able to meet their financial commitments. My phone consultations with these folks often began with, “Mark, I never thought in a million years that I would not be able to pay my bills … “.
Many people ran out of options, felt hopeless, and felt they needed a lifeline. Sadly, some companies exploited the misfortune of others and created debt settlement “programs” that grossly overstated the results that could be achieved. Thankfully, not all debt settlement companies are like this, and many do provide a legitimate service for a reasonable fee. However, enough people were harmed by unscrupulous debt settlement companies that it warranted the creation of this new law.
A Good Law For Consumers
I usually feel that the government should leave people’s personal financial issues alone. But in this instance I agree with this law because too many desperate people were being taken advantage of. Now under the TSR, debt settlement companies will either have to be honest or leave the industry.
I’ve worked in this industry since 1995 and there are plenty of reputable debt relief firms that provide valuable services at reasonable rates. People experiencing financial difficulty deserve the option to get professional help, but they don’t deserve being ripped off or mislead. In time, I believe this law will clean up the industry and ultimately be a good thing for consumers.
For more information on services provided by reputable firms, please click here
Credit Repair After The Credit Card Debt Settlement Process Is Complete
Posted: September 30, 2010
Filed Under: Answers To FAQ
A question that I’ve gotten over and over is, “Is there any way to repair my credit after I complete the debt settlement process?” Actually, there is.
However, before proceeding we need to be in agreement on one thing. That is, there is no quick fix to restoring your credit report.
If you just settled your outstanding credit card balances for less than full balance, you have to remember that there is a trade-off for receiving substantial debt relief without filing bankruptcy. And that trade-off is that your credit report is going to get dinged. That’s just how things work. There’s no way of getting around it. Every client that I’ve ever worked with understood this before they began the debt settlement process.
In the unfortunate event that no one told you that your credit report would be adversely affected, I’m sorry about that. But all is not lost. Let’s now discuss your options moving forward.
The Fair Credit Reporting Act
Regarding your credit score, the Fair Credit Reporting Act (FCRA) clearly states that the maximum amount of time that a derogatory item may stay on a person’s credit report is 7 years. But it does not say that it *must* remain for 7 years. Only a *maximum* of 7 years.
So here are your options:
A. Do nothing, and your credit report will gradually recover on it’s own in time … worst case scenario >> 7 years.
B. Be proactive and take steps to try and clean up your credit report sooner rather than later. Based on feedback from my clients over the years, they often report that with a little effort they’ve sees their credit score return to a respectable level within 2-3 years, sometimes sooner.
If you choose option B, you can take the do-it-yourself approach or you can just pay a reputable firm to do this for you.
Getting It Done
Now, I’m all about saving money and I’m not afraid to roll up my sleeves and get my hands dirty. But when it comes to trying to clean up your credit report, I usually encourage people to just pay a reputable credit repair service firm to do this task for them because the credit repair process is very meticulous and time-consuming (translation: an exercise in wading through bureaucracy).
Here is the firm that I have been referring my clients to for years >> www.lexingtonlaw.com
They’ve been around since 1991, they’re very affordable, they really are a law firm and they usually produce good results. They’ve got the credit repair process worked out to a science, and in my opinion they can perform this task much more efficiently and effectively than you or I could on our own.
That’s my 2 cents on how to go about credit repair.
For more information on the FCRA:
www.ftc.gov/os/statutes/031224fcra.pdf
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What's New
- Real Time Debt Statistics – The U.S. Debt Clock
- Coping With The Fear And Shame Of Debt
- Bankruptcy vs Settlement – Which is better?
- Telemarketing Sales Rule (TSR) To Regulate Debt Settlement Companies
- Credit Repair After The Credit Card Debt Settlement Process Is Complete
- Screw Your Credit Card Debt (at least for the next 15 minutes)
- Credit Card Debt Settlement Strategy: Persistence Pays!
- Jailed For Past Due Credit Card Debt
- The New Credit Card Law: No Big Deal
- In Defense Of Credit Card Companies
- Three Gems From Michael Moore’s 15-Point Action Plan
- Beware Of Misleading Advertising From A Few Debt Settlement Firms
- Bankruptcy FAQs
- Cross-Collaterization: Yes, They Really Can Take Your Money
- The Credit Card Accountability, Responsibility and Disclosure (CARD) Act
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