Submitted by Jen Jones on Tue, 06/23/2009 - 3:14pm
Credit card debt can easily spiral out of control. Credit card companies lure you in with promises of low introductory interest rates and then encourage you to charge as many of your purchases as possible. Then, they discourage you from paying off the balance, by setting a low minimum payment -“ usually just a touch more than the interest charge.
Even if you're diligent and try to pay off the whole balance every month, when unexpected expenses come up, it's tempting -“ and sometimes necessary -“ to just make the minimum payment. The interest adds up fast and, if this pattern continues, you can quickly find yourself carrying a high balance you simply can't afford to pay off any time in the foreseeable future. And things can get really hairy if there's a hiccup in your income stream, like a job loss, pay cut, or injury that keeps you out of work. Even minimum monthly payments may be too much for you to afford. Unfortunately, more and more Americans are finding themselves in a precarious financial situation because of the combination of a faltering economy and years of credit card debt accumulation.
So what can you do if you're in this position? Well, you could call the credit card company yourself and try to work out a deal. The biggest problem here, of course, is that the creditor has no obligation to work with you. Even worse, if you tell them you can't afford the payments, they very well may reduce your credit limit to the current outstanding balance. This could leave you without any credit.
You could also enlist the help of a credit counseling agency to work directly with your creditors to establish a repayment plan or strike debt settlement agreement. You must be careful here too, though. Scammers and fly-by-the-night operations abound, especially now with all the people out there desperate to find a solution for their financial ails. Also, these services come with a cost -- often a hefty one -- and there's no guarantee you'll see any real results. The counseling agencies may be more schooled in negotiating with credit card companies, but, at the end of the day, they have no more power than you do: the fact remains that the credit card companies simply have no obligation to work with them or you. And, if you're unable to make the payments in the meantime, you can bet the late fees, interest charges, and collection calls will continue.
This is not to say you should completely write off the idea of working with your credit card companies directly or through a counseling agency. But you need to be aware of the limitations of those options. You also need to keep in mind that even if you or the agency are able to convince your creditors to forgive some or all of the debt, that may be not be the end of the story: if your debt is forgiven, you are still on the hook for the tax liability.
Ultimately, bankruptcy is the only sure-fire solution to resolving unmanageable debts. Filing bankruptcy forces credit card companies to stop collection activities, immediately. And, you can wipe out most or all of these debts, for good -“ without worrying about any potential tax liability. So, if you're buried in credit card debt, call a bankruptcy attorney today and learn how you can rid yourself of these burdensome debts once and for all.
In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson.
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