payment

Jul 11 2011

Debt Elimination, Present Day Con Jobs

If you have lived long enough and took the time to pay close attention you’ll notice that trends often come in cycles. What’s cool now will likely be cool once more 10 years from now. Just take a look at all the new fashions people are wearing these days. You might recognize many of them from your own youth, or the youth of your parents. This is the natural order of things. Folks become crazed with something until it ultimately burns itself out, but when enough time has passed somebody decides to bring back those old trends to go for one more round on a fresh number of people.

This process of cycles does not limit itself to simply fashion. It can also be seen in other facets including debt relief. To comprehend this, you need to comprehend the various types of debt relief. The oldest of these forms is Bankruptcy. This was created for people who fell on hard times to stay away from being shot, hung or sent to debtors’ prison. As time continued however people seen that this became an instrument that might be used and exploited. Folks would intentionally overextend themselves and when they hit their max capacity, they’d file for bankruptcy and get it all wiped away.

For years financial institutions lobbied to get this changed. Around 1995 the bankruptcy abuse act was established. This put tougher regulations on who could and couldn’t be able to get a chapter 7 bankruptcy. It put a bigger focus on a chapter 13 bankruptcy, which is really a repayment program where people could end up paying 80 % or more back to the lenders.

To offset the losses they were seeing from the rise in bankruptcies, banks started to increase interest levels. After some time the interest rate caps rose to around thirty percent or more. This put many people who were still paying their debts either on a endless cycle of paying minimum payments and getting nowhere, or on the edge of falling behind. Because of this the consumer credit counseling program came about. In most situations these agencies were run, or at the very least backed by the lenders themselves. What this permitted people to do is to stop using their credit cards and put them into this program. The company would seek to lower all the interest rates then you would make one payment per month to the agency who’d distribute that out to the creditors monthly.

The good part with this program is that you were capable of paying down the debt in 5 to 6 years. This is clearly significantly better than taking 30 or more years. But, the negative effects was that the payment you were making was generally the same as your minimum payments in the very first place, so in case you were in a situation where you were close to fall behind, then this wouldn’t avoid this.

Again with most things, people became greedy and as increasingly more people chose to ring up their credit cards then enter them into a CCCS program hoping for 0 % interest for good, the credit card banks changed several of their guidelines. Several of them did away with 0 % interest levels or limited them to a single year. Additionally they started to reevaluate people after six months to a year, to ascertain if they still qualified for the program.

Next came the debt consolidation loan boom. As property values started to increase, mortgage brokers discovered increasingly more people with equity within their houses that might be accessed. Thus began the home equity loan boom. Thousands upon thousands of people started to utilize their houses equity and consolidate their debt into one reduced monthly payment. But once more greed started to dominate. As the pool of prospective people who qualified for traditional loans dwindled, the industry started to create new ARM loans for people who wouldn’t have normally had the capacity to obtain a loan. This was the beginning of the housing crash. As with every bubble, if you continue inflating and blowing it up ultimately, it is going to pop. This is exactly what happened. As these adjustable rate loans started to alter, several of them tripled the interest rates forcing the house owner to go delinquent and in numerous situations lose their houses.

As you may know there are always likely to be those people who will benefit from people who are in dire straits. We frequently call these people “snake oil salesmen” coined in the early years when people would sell fictitious potions to cure almost everything from hair loss to arthritis. These get wealthy quick type of people would sell this tonic to people eager for a cure. In many cases really quickly, people would recognize that this was a scam, but not prior to many people would have fall victim to them. If the salesperson was not hanged, he would lay low, journeying from town to town until people forgot about him and the fact he was a sham, then he would pop his head up once more selling his snake oil to people who did not know it was a scam.

Just as these snake oil salesmen, you can find people in the credit card debt relief industry that attempt to benefit from people in desperate situations. One type of this get wealthy scam is what is referred to as debt elimination. The idea of this is that you hire an attorney who’ll attempt to sue the credit card companies stating that the debt is not valid. They attempt to make use of old loopholes in the law proclaiming that it’s unlawful how they calculate interest rates, or forcing them to “prove” that is is your debt. Regardless of what these people let you know, ask your self this one question. Did you charge the debt? Did you benefit from using the card by making purchases for products that you owned? Unless somebody stole your card and made purchases you didn’t know about, or the bank added charges to your bill that belongs to another person, in most all situations the response to that question is going to be yes. That being said, you are likely to be challenged to persuade a judge that the debt is not yours and that you don’t owe it.

The final form of debt consolidation program is debt negotiations. There are essentially two varieties of debt negotiations. The very first is referred to as Debt resolution. This is where you hire an attorney to negotiate with your credit card companies, in your stead, in an attempt to get them to agree to accept much less than your full balances. The key problem with this form of debt relief, it that in most situations the debt settlement lawyer charges you a retainer along with a monthly legal fee in advance before any settlements have been achieved. This is generally on in addition to their settlement fees. Although it might appear reasonable to pay an attorney to legally represent you, what many people don’t understand is that the lawyer won’t represent you in court. Actually, several of them won’t even help with answering the lawsuit. All they are representing you for is to negotiate the debt and that’s it. So essentially you are paying them extra to do absolutely nothing.

The other form of debt negation is known as debt settlement. As with the above example, this is where the debt is negotiated for much less than what you currently owe by a qualified debt settlement company with a confirmed background. Just as with the law firms you can find those debt settlement companies that will attempt to take fees upfront. Be careful, this goes against current regulations. Any trustworthy settlement company will in no way charge you for their services until the debt has been settled.

It truly doesn’t matter what form of debt relief you decide to go with, ultimately you need to be properly informed. A reputable company will do everything they can to make sure you understand all of your options and have a clear comprehension of all of them. They won’t attempt to push you into anything and will go into great detail when examining your case. If you’re looking for debt settlement, do your research and make sure you are dealing with a business which is willing to follow the regulations, not charge you any fees until a settlement has been reached, and who will make sure that the alternative they offer you is really the very best choice for you.

By Kha5 • Advice debt pensions • • Tags: chapter 7 bankruptcy, consumer credit counseling, equity, interest rate caps, payment, time