If
you think you are alone, read on.
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The average household
has 10 credit cards.
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The average balance
on a credit card is $4,000.
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Late fees are now
$29.00, (if not received
on the payment due date).
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Almost half the households
in North America report having difficulty paying their
minimum monthly payments, thus making bankruptcy seem
like a good alternative
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If your credit card
balance is $8,000, and you make the minimum monthly
payment at 18% interest, it
will take you 25 years, 7 months to pay the debt off.
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You will pay $15,432
in interest charges, (almost twice the balance), bringing
your total to $23,432.
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Americans paid out
approximately $65 billion in interest last year alone.
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Last year over 1.5
million North Americans filed for Bankruptcy, the
highest in history, how’s that for debt statistics?
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Credit card companies
solicit the average North American 7 times a year
through the mail.
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If
you didn’t have your credit card payment of $218 a
month, and you instead invested that money in a 12%
savings plan, in 25 years you could retire with $1,354,930
in the bank.
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Your
credit card payment not only will cost you thousands
in interest, but also prohibits many from adequately
saving for their retirement and makes bankruptcy look
like the only alternative.
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To calculate your
debt to Income Ratio, divide your debt by your income.
(Ex. A person making $20,000
a year gross income with $10,000
of outstanding debt has a 50% DTI Ratio.) If your
Ratio is over 45%, you will be offered higher interest
rates when applying for loans. The lenders will see
you as “overextended”.
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The typical “Minimum”
Monthly Payment is 90% interest
and 10% principle.
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Ever
wonder why you keep getting all those “Pre-approved” credit
card offers - even though you’re in debt, thinking of personal
bankruptcy or maybe your credit rating is far from perfect?
It has been the trend, as of late, for creditors to offer
their cards to all consumers, especially those with credit
and debt problems in the past. They hope that your past
poor credit habits will force you to spend more money with
their card - and rack up plenty of interest and late charges
making personal bankruptcy look appealing. They’ll earn
money and you’ll be back in financial turmoil.
You’re
certainly not alone:
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1997-1998:
The average American adult received 7 credit card
offers through the mail, regardless of their credit
history.
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You might be wondering,
“I owe my creditors thousands of dollars - there can’t be
anyone worse off than me! I need to declare personal bankruptcy!”
Check out the following debt statistic and see how you are
not alone. Keep in mind that the dollar amount is an AVERAGE
- that means there are people out there who owe a lot more
than our example:
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The average
family in credit card debt carries a balance of $4,000
on several cards from month to month.
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One
indicator of debt in North America is the number of personal
bankruptcies declared each year. While many more bankruptcies
are declared than need to be, this statistic shows how many
people feel their debt burden is more than they can handle
and declare bankruptcy:
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Personal
bankruptcies are at an all time high! In 1998 there
were more than 1.5 million declared.
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In
1998, the national consumer debt reached an all-time high
of over 1 trillion dollars. Credit card debt was just as
striking, approximately 565 billion dollars.
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So,
What Are Your Options ?
You
basically have 5
options to help you get to a Debt Free future: Credit Counseling,
Debt Consolidation Loan, Bankruptcy, Do Nothing or a Debt Reduction/Arbitration
Plan. How do you know which will work best for you? It depends
on your level of debt, the stage of your debt problem, your level
of discipline, your current income and resources and your prospects
for the future.
1.
Credit Counseling (a long term process)
Your
creditors may be willing to accept reduced payments if you enter
a debt repayment plan with a Credit Counseling
organization. In these plans, you deposit money each month
with the credit counseling service. Your deposits are used to
pay your creditors according to a payment schedule developed by
the counselor. As part of the repayment plan, you may have to
agree not to apply for — or use — any additional credit while
you're participating in the program.
A
repayment plan requires you to make regular, timely payments,
and not miss one and could take 60 months or longer to
complete. Credit Counseling services charge for managing the plan;
some charge a monthly fee that could add up to a significant charge
over time. Most Credit Counseling services are funded, by contributions
from Creditors. Many are owned by Collection Agencies. They
then get paid a percentage of every dollar collected from you
by the credit card companies (just like a collection agency) plus
a monthly fee from you.
While
a debt repayment plan can eliminate much of the stress that comes
from dealing with creditors and overdue bills, it does not
mean you can forget about your debts. You still are responsible
for paying any creditors whose debts are not included in the plan,
and 100% of the amount owed on the accounts in the plan. You are
responsible for reviewing monthly statements from your creditors
to make sure your payments have been received. You will be paying
the full amount owing on your accounts plus interest.
A
debt repayment plan does not erase or help your credit history.
Under the Fair Credit Reporting Act, accurate information about
your accounts can stay on your credit report for up to seven years.
In addition, your creditors will continue to report information
about accounts that are handled through a debt repayment plan.
For example, creditors may report that an account is in financial
counseling, that payments may have been late or missed altogether,
or that there are write-offs or other concessions. These are negative
comments on your Credit file.
2.
Debt Consolidation ( You can not borrow your way out of debt
)
You
may be offered and consider lowering your monthly cost of credit
by consolidating your debt through a second mortgage or a home
equity line of credit. Think carefully before taking this on.
These loans require your home as collateral. If you can't make
the payments — or if the payments are late — you could lose your
home.
The
costs of these consolidation loans can add up. In addition to
interest on the loan, you pay "points." Typically, one
point is equal to one percent of the amount you borrow. Ask
yourself why you want to go from an unsecured loan to a secured
loan over a longer period of time and put yourself at more risk.
Debt Consolidation is not a way out but a way into deeper trouble,
if not careful. It can be a valuable tool but, you must reduce
your debt first before considering this option !
More
Info
3.
Bankruptcy
Personal
bankruptcy generally is considered the debt management option
of last resort because the results are long-lasting and far-reaching.
A bankruptcy stays on your credit report for 10 years, making
it difficult to acquire credit, buy a home, get life insurance,
or sometimes, get a job.
Bankruptcy
may get rid of unsecured debts and stop foreclosures, repossessions,
garnishments, utility shut-offs, and debt collection activities.
Note that personal bankruptcy usually does not erase child support,
alimony, fines, taxes, and some student loan obligations.
Bankruptcy
laws are changing making it more difficult to use, this is due
to considerable lobbying by the Credit Card industry and financial
industry to close this avenue to consumers.
Most
often bankruptcy is not even necessary. Not only is your credit
completely destroyed through bankruptcy for 7-10 years, but you
might hinder yourself in many other major areas of your life,
such as finding a job, buying or even renting a home, acquiring insurance,
security clearance and buying or leasing a car.
4.
Continue To Do Nothing
This
is the option that is chosen by most, believe it or not. Most
people choose to do nothing because they think they will avoid
the embarrassment and humiliation that might be involved by doing
something ie: Credit Counseling, Debt Consolidation or Bankruptcy.
Doing
nothing except juggling minimum payments catches up to you ! The
situation gets worse, and it becomes very demoralizing. Eventually
you are faced with the calls and letters from your Creditors and
Collectors. Your Credit rating becomes ruined and your quality
of life is anything but pleasant. Don’t allow yourself to fall
into and stay in the trap of ignoring your problems, do something
positive to get your life back.
5.
A Serious Debt Reduction Plan – The Smart Choice !
We
will help you to “take control” of your financial situation. The
first step is to recognize that action is necessary and is necessary
now! We can show you how to get out of debt as soon as possible
by first REDUCING your amount of debt. We will Stop Creditor Harassment
and relieve the stress that comes with that. Your quality of life
will immediately improve. Our program involves an aggressive attitude
and approach to your debts with negotiating substantial debt reductions
as the goal. Our system is proven with debts reduced on average
to 35 –50 % of original balances.
We
will represent you as Professional Debt Arbitrators by Retainer
and contract. If you choose to Retain
our Services to represent
you we only charge our fee on a percentage basis ( 30% of savings
) which always leaves you in a net savings position. You can increase
your net gain even more by representing yourself.
If
you now owe $20,000 pay $10,000 or less – owe $50,000 pay $25,000
or less !
We
are independent of the Creditors and Collectors who are hounding
you, we do not work in conjunction with them. We negotiate savings
on the principle amount owed and not just the interest rate. We
are not in the business of granting secured debt consolidation
loans and do not recommend you do this.
Our
program is the fastest route to getting your life back most people
are out of debt within 12 –30 months when using our system.
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