- How easy is it to get into Debt without realising the extent?
- How easy is it to get into debt when you are young?
- How easy is it to become dependent upon Credit and Store Cards?
- How easy is it to get deeper into debt and not realise it?
- How easy is it to use credit cards when times are hard just to live?
- How easy is it to cover holidays and Christmas expenses?
- How often have you done this and then lived with deep regret?
You can be lead by the hand into debt and not realise it! The Credit Card Companies and Banks aim is to get you into as much debt with them as they possibly can and hope to keep you there for life. They try to use every trick in the book to get you to run up the biggest debts possible, their business is to lend money to earn huge amounts of interest from you. You get offers of all kinds, via your mail box, newspapers, junk-mail, TV ads, even via your phone. Your bank and building society also try their best to get you signed up for personal unsecured loans and credit cards.
Have You Been Offered any of the following? (Yes of course you have!)
- One month or longer interest free credit,
- Cheques with your card for convenience,
- Had your credit limit increased without you requesting it,
- Discounts from some stores offered from your credit card,
- Cash back when you spend or points to collect.
You name it they offer it to get you to spend and keep spending.
Beware Of The Pitfalls!
As soon as someone hits 18 years old they get bombarded with credit offers. Credit cards and store cards are seen by many young people as a key to financial freedom and being young and naive they sign up. So, before they know it they are saddled with crippling debt, with crippling compound interest and they have been sucked into the debt vacuum.
The credit companies will offer to sign you up with a 0% introductory offer. Wow, this is great no interest, so this helps the temptation to go and spend more.
Shock & Horror!! 6 months later this new found free money flow is now costing you about 19.9%. Eventually they could raise this to well over 30% with no explanation on money you may have spent thinking you were OK it is interest free. You are in the small print told the time limit of your 0% free time, but they know you will be in debt when the interest kicks in and they will earn big time from you for a long time.
They will constantly send you with “convenience” balance transfer cheques when they know you are in trouble and desperate for cash. These Banks and credit card companies are no better than loan sharks. One difference loan sharks get accused of extortion if they use some of the rates the credit card companies use.
Some Very Important Facts You Should Know:
Credit Card debts are unsecured debt.
Your Credit Card Creditor cannot send bailiffs to you house. However if you are in trouble and cannot or have not paid they may well send you a post card to tell you someone will call.
This is used to try to scare you into making a payment, or for you to contact then so they can talk to you by phone and demand payment from you.
The cards could read something like
‘A member of our team has visited your home today to talk about your account but has not been able to catch you, please call us immediately’
Or
‘One of our agents will call at your home during the week commencing (then put date of following week) to discuss your account’.
They Cannot get you put into jail, or even visit your place of work.
You need to know. All the phone calls and letters that you receive are simply scare tactics. Your creditor knows that unless they are hard with you they will not get their money back. They will use every trick in the book to get you to pay up. They will try to panic you and worry you. This causes home and health upsets so they hope you will pay up to get free of all this from them.
Most of the calls you get will be from a dialler system. This means a computer makes the phone call to you. When you pick up the recorded message it diverts it to an agent, who gets a beep in their ear and your account details then are popped up on their computer screen.
Until this call, this agent knew nothing about you or your account.
As they are talking to you they usually use this time of going through the questions of security just to have a quick glance at your account details.
The calls can become relentless and they will call you every day 6 to 10 times per day if they have to.
How it works is that the dialler (computer) creates a list in the morning of everyone on the company debt list in their collection’s department. It then usually starts the calls at 8am in the morning, then once finished usually at around 1pm they will simply run it again. Sometimes they will phone the same people on their land line and mobile numbers and also send text messages in a day. It’s basically phone harassment.
Almost all letters you receive will be system generated. Letters are sent out at certain points in the process i.e. arrears letter, default notice, threat of court action etc.
The absolute worst thing that can happen to you if you do not pay them is for them to take you to court and try to get a CCJ (county court judgement) placed against you.
A judge will have to determine what you can realistically pay and order you to pay it (this would never usually be more than 10% of your disposable income). Paying this very small amount in most cases means you will live your life paying this debt. However should your financial position improve you could always try to contact the credit company and request a settlement agreement and pay a small amount to finally clear the debt. Most companies will negotiate a settlement rather than spend 10 to 20 years getting peanuts from you every year. It is worth a try they can only say no, or give you a settlement figure too high for you to manage to pay them off, so you leave things as the court set them, nothing lost by asking.
Your aim is to become such a pain in the butt that it either becomes too expensive or too time consuming for them to continue to pursue you for the debt any longer.
How Debt Collection Works & Do Not Get Bullied Over Debt
After 90/120 days (three to four months) you will get a computer generated default notice. This notice is registered at the credit reference agencies i.e. Experian and/or Equifax and there are others. This debt will show on record against you until it is cleared.
Then in 120/ 180 days (four to five months) your account will be referred to a Debt Collection Agency (DCA) The debt has now simply been referred to them, as the debt collection agencies are sometimes in-house or work on behalf of your original creditor. They almost all work on a commission basis.
If you were to pay a debt collection agent they forward your payment and collect commission from your creditor. This results usually, in adding their fees to your debt by the creditor to try to recover any commission paid.
If you do not pay them they just send your account back to your original creditor, telling them all attempts they have made to reclaim money from you have failed. They have exhausted all their methods of debt recovery on your account.
As I pointed out earlier it becomes too expensive for the debt collection agencies to pursue with their cost to cover for mail, phone calls to you and to staff this to achieve no results on collection.
In 180/ 240 days your debt will be written off by the creditor. At this point you still have the debt outstanding but the original creditor, will probably sell the debt on to a third party for as little as 10p in the £1.00, and the process will start all over again.
Understanding Your Credit Rating
Your credit rating lasts for 7 years. So if you didn’t pay your full debt back, in 7 years you can have it removed from your record and then start all over again.
However if you have attempted to pay even a penny off in that time, the 7 years would start all over again from the date of the last payment. It has to be 7 years completely unpaid for your credit rating to be repaired.
If you cannot realistically repay your debt then don’t!
Here’s why not. If you have a debt of say £9,000 and make an agreement to pay back £50 a month, even with the interest and charges frozen it will still take you far longer than 7 years to pay it back. In that time you could have not paid any-thing and started to rebuild you credit rating. Get your life back on track and have a fresh start. There is always help available to you. Don not bury your head in the sand. Ask for help.
There is a program you can use to help yourself clear credit card debt in days without expensive Debt Management.
This powerful informative system is packed full of information on how the banks and loans and credit cards work and how you are protected under the Consumer Credit Act. This powerful system is full of advice and methods for you to consider. It offers you an opportunity to eliminate your unsecured debts. People sometimes feel they cannot find help or are too distressed or embarrassed to ask for help, this can cause personal problems at home and work due to stress and even affect ones health.
Understanding your rights and how Credit card and Loan Company’s work can help you move forward to a resolution.
Lady Barbara operates 2bdebtless. You can see your financial future in a new light, and you can be credit card debt free in days. http://www.2bdebtless.co.uk
Author: Barbara Binyon
Article Source: EzineArticles.com
Provided by: WordPress plugin Guest Blogger
You must log in to post a comment.