Debt elimination, present day rip offs

July 15th, 2011 |

Author: admin

If you have lived long enough and took the time to pay close attention you will notice that trends usually appear in cycles. What is cool now will likely be cool again 10 years from now. Just take a look at all of the new fashions people are wearing these days. You might recognize a few of them from your own youth, or the youth of your parents. This is the natural order of things. Individuals grow to be crazed with something until it eventually burns itself out, but when enough time has gone by somebody decides to bring back those old trends to go for an additional round on a fresh set of people.

This procedure of cycles doesn’t limit itself to simply fashion. It can also be observed in other facets like debt relief. To comprehend this, you will need to comprehend the different varieties of debt relief. The oldest of those forms is Bankruptcy. This was developed for people who fell on difficult times to stay away from being shot, hung or going to debtors’ prison. As time went on however people realized that this was a tool that might be utilized and taken advantage of. Individuals would purposely overextend themselves and as soon as they arrived at their max capacity, they would file for bankruptcy and get it all wiped away.

For years financial institutions lobbied to get this changed. About 1995 the bankruptcy abuse act was established. This put stronger rules on who could and could not qualify for a chapter 7 bankruptcy. It put a bigger emphasis on a chapter 13 bankruptcy, which is really a repayment program where people could wind up paying 80 % or a lot more back to the credit card companies.

To offset the deficits they were seeing because of the increase in bankruptcies, banks started to boost interest levels. After some time the interest rate caps rose to around 30 % or more. This put many individuals who had been still paying their debts either on a perpetual cycle of paying minimum payments and getting nowhere, or on the brink of falling behind. Out of this the consumer credit counseling program came into being. In many situations these agencies were run, or at the very least backed by the finance institutions themselves. What this allowed individuals to do is to stop making use of their credit cards and put them into this program. The company would seek to lower all of the interest rates then you’d make one payment per month to the agency who’d disperse it out to the creditors monthly.

The good part about this program is that you were able to pay down the debt in 5 to 6 years. That is clearly a lot better than taking 30 or more years. But, the downside was that the payment you were doing was typically the same as your minimum payments in the first place, so if you were in a situation where you had been about to get behind, then this would not stop this.

Once more with most things, men and women became greedy and as a growing number of men and women decided to ring up their cards then enter them into a Consumer Credit Counseling program seeking zero percent interest charges for good, the credit card banks changed many of their procedures. Several of them did away with 0 % interest levels or limited them to a single year. Additionally they started to reassess folks after six months to a year, to find out if they still qualified for the program.

Next came the debt consolidation loan boom. As property values began to increase, mortgage brokers found increasingly more individuals with equity within their homes that might be tapped into. Thus began the home equity loan boom. A large amount of people began to tap into their homes equity and consolidate their debt into one low monthly payment. But again greed began to take over. As the pool of prospective individuals who qualified for conventional loans disappeared, the industry began to produce new adjustable rate loans for people who would not have normally had the opportunity to receive a loan. This was the start of the housing crash. Just like any bubble, if you keep inflating and blowing it up eventually, it’s likely to pop. This is what happened. As these adjustable rate loans began to change, several of them tripled the interest rates making the home owner to fall behind and in a lot of instances lose their homes.

As you may know there are constantly going to be those individuals who will make the most of individuals who are in dire straits. We frequently call these men and women “snake oil salesmen” coined in the early years when people would sell make believe potions to remedy every little thing from thinning hair to arthritis. These get rich quick kind of individuals would sell this tonic to folks desperate for a remedy. Often times quite quickly, men and women would recognize that this was a scam, but not prior to lots of people would have become victim to them. If the salesperson wasn’t hanged, he’d lay low, traveling from town to town until men and women forgot about him and the fact he was a sham, then he would pop his head up again selling his snake oil to individuals who didn’t know it was a scam.

Just like these snake oil salesmen, you can find individuals within the debt relief programs industry that try to take advantage of men and women in desperate circumstances. One sort of this get rich scam is what’s called debt elimination. The concept of this is that you hire a lawyer who’ll try to sue the collectors saying that the debt is not valid. They attempt to make use of old loopholes within the law stating that it is unlawful how they calculate interest rates, or forcing them to “prove” that is is your debt. Regardless of what these folks let you know, ask your self this one question. Did you charge the debt? Did you benefit from using the charge card by making purchases for products which you owned? Unless someone stole your card and made purchases you didn’t find out about, or the bank added charges to your bill that belongs to another person, in almost all cases the response to that question is usually yes. That being said, you are likely to be challenged to convince a judge the debt is not yours and that you don’t owe it.

The last form of debt consolidation programs is debt negotiations. There are basically two types of debt negotiations. The very first is known as Debt resolution. This is when you hire a law firm to negotiate with your collectors, for you, in an attempt to get them to agree to accept less than your full balances. The key problem with this form of debt relief, it that in many circumstances the debt settlement law firm will charge a retainer in addition to a monthly legal fee in advance before any settlements have been achieved. This is generally on top of their settlement charges. Though it might seem reasonable to pay an attorney to legally represent you, what lots of people do not understand is that the attorney won’t represent you in court. In fact, several of them will not even help with answering the summons. All they’re representing you for is to negotiate your credit card debt and that’s it. So essentially you are paying them extra to do absolutely nothing.

The next form of debt negation is known as debt settlement. As with the above example, this is where your credit card debt is negotiated for much less than what you currently owe by a qualified debt settlement company with a proven track record. Just as with the lawyers you will find those debt settlement companies that may try to take fees in advance. Be careful, it goes against present regulations. Any trustworthy settlement company will never charge you for their services until the debt has been settled.

It truly does not matter what type of debt relief you decide to go with, in the end you need to be properly informed. A reputable company will do everything they are able to to make certain you know all of your alternatives and have a clear understanding of all of them. They won’t try to push you into anything and will go into great detail when reviewing your case. If you are searching for credit card debt relief do your research and make sure you’re dealing with a business that’s 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 really the best option for you.

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Debt elimination, present day rip offs