Monday, November 26, 2012, AM | 1 Comment
At the dawn of the so-called Great Recession, the country’s unemployment rate reached the highest level since the infamous Great Depression of the 1930s. As a result, many Americans were forced to take on crippling amounts of debt.
On top of that, when they tried to seek out help, they were bitten by snakes and squeezed by anacondas in the great swamp of financial miseries – the quagmire of debt – that they were thrown in.
They were unable to get out the sinking sand without the help of someone who could drag them out, wash them and start a new financial life.
They were seeking help from debt-settlement firms. Many folks have known for years that this industry has more bad apples than good ones. They are rife with scams.
Many such firms were created for the sole purpose of conning innocent consumers. The face of the bad was very similar to that of the good helper.
It’s hard to differentiate between the two kinds. Consequently, many folks were bitten by the bad kind and lost more to them than they owed to their creditors.
According to the Federal Reserve, as a nation, Americans owe $721 billion on outstanding credit cards. CreditCards.com did their calculations and came up with the staggering amount of $15,950 in credit card debt per household carrying only one card.
Just these numbers tell us that people want help – any kind of help to get them out of the debt shit they have stepped in. However, only a fraction of people seek aid from a credit counselor.
Difference between Credit Counselor and Debt-Settlement Firms
We must understand the difference between a credit counselor and debt-settlement firms. Credit-counseling agencies have been getting bad raps unfairly because most folks confuse them with debt-settlement companies.
Credit counselors advise folks on how to make better budget and lifestyle decisions so that they can pay off their debt expeditiously. These counselors help debtors to develop a debt-management plan to pay back their creditors.
The best part is that you can attend many counseling sessions for free. Some counselors charge nominal fee, typically $20 per session.
On the other hand, debt-settlement firms offer to negotiate with a person’s creditors to slash the amount of debt they own. Many firms charge clients a large fee for their services.
Debt-settlement firms are rife with scam artists and the primary reason is that historically they charge huge fees. There is a lot more money to be made if you own or work for a debt-settlement firm.
Fortunately, the Consumer Financial Protection Bureau (CFPB), formed in 2010, has started to address some of those problems, but for many years deceptive debt-settlement agencies operated without a watchdog.
Even today under the watchful eyes of CFPB, some individuals and firms have been alleged to have deceived the American public, especially the senior citizens among us.
Be open to Credit Counselor…
There are misconceptions about consulting credit counselors:
Many folks are afraid that consulting a credit counselor will hurt their credit score. Nothing can be further than the truth. Talking to one has no impact on a person’s credit or credit report.
Walking into a physical location of a credit counselor can be intimidating and detrimental to their ego, especially if the person doesn’t want to admit face-to-face how much deep they have stepped in the quagmire of debt.
The sense of shame that can accompany having to admit to a credit counselor they owe a heap of debt. This does not make sense in the case of folks who don’t feel ashamed when they keep on buying even when they don’t need to.
Red flags why you must talk to credit counselor…
You ought to consult a reliable and reputable credit counselor when these red flags are raised.
Debt collectors are at your doorstep. They keep calling you day and night. You are unable to sleep because of your debt. In this case, the sooner you can get to a credit counselor, the better.
You cannot repay a single dime towards your debt. You live paycheck to paycheck. Wake up and seek help.
Debt is creating tension and uneasiness in your family. Media report many cases of divorces due to not being able to pay off debt.
When you receive bills, you hide it from the family. You are ashamed to even show them the bill let alone talk about them.
You are using cash advances on your credit card or you may be using the services of payday loans. In both cases, you are stepping deeper and deeper in the sinking sand.
A time comes when you don’t even care how much you are in debt. That means there is no way you alone can manage – to say the least – or clean your debt shit.
Your credit card has a maximum in a given month. You keep maxing out your card every month. Wake up and smell the credit counselor.
If you have retirement account, you start and keep withdrawing from it.
In a Nutshell
Credit counselors, because they are a lot less expensive – can I use the word cheap? – can be a great help to come up with a budget for your household finances.
The important thing to remember is “Don’t Be Bashful When You Talk To Credit Counselor.” Open up your little gray cells (Agatha Christie) and start talking about your debt to the credit counselor.
The Credit Card Song by Old Man Pie
Ahead of its time this is a cartoon animation that’s been up on the web since 2006 and is all about the credit crunch crisis.
Credit card spending and loans from banks are in their trillions of dollars and something has to give. We no longer spend what we have earned, we spend what we haven’t earned on the back of house price rises and yet more loans.
The banks are prospering and fat cats are awarding themselves massive bonuses, but it cannot continue.
Beware the debt time bomb may bring the walls of the western world clattering to the ground.Facebook.com/doable.finance
- Nov 28, 2012: Don't Be Bashful When You Talk To Credit … – Doable Finance | Golden Globe Nominations 2012