Thoughts on Debt

Okay, so we realize that the banks in this country are going under, but how will that effect the average consumer.  Well, it will mean that the whole credit system will need to be revamped and this may or may not be a good thing depending on who you are.  The credit card and loan companies don’t have any more money left to lend and are in the process of actually recalling the credit that they have overextended to everyone.  If you don’t have all your credit used, the bank may close down the credit lines that you have available to you right now.  For some people, this is devastating, while others are taking clear advantage of the system and maxing out all their credit turning it to cash for use later.  Only one problem, you are putting that money where? Of course in the bank, so what you are really doing is giving them the money back anyway.  Now that is not a problem until everyone doesn’t pay back their debts.  Then the banks will be left without money and whose money do you think they are going to use? Of course, your money (which essentially is really their money).

The problem is now, people are realizing that unless they have exemplary credit and no outstanding balances, they won’t be getting any new lines of credit.  This means that they won’t pay back what they have outstanding now because the banks really have no recourse, and there is no more money coming.  Debt collectors are getting desperate, since they really can’t collect on outstanding balances owed and they are going to have to cut enormous deals to get people to pay.  After all, most people are thinking the country just fronted them huge amounts of money, why should we pay them again? The only problem with this, is that our country will never have any type of credit card or loan system again, because if this one can’t be saved and things only get worse, people will only be able to buy what they can afford, and at the wages we are making people it ain’t much.  I personally think that is the way it should have been all along, but the banks and credit card companies decided to get greedy, leaving just about everyone in a hole that they can’t get out of.

As a society, we tend to ignore and turn away from things that we don’t like.  Avoiding conflict and problems has been a theme in this country for a long time.  We don’t mean to do it, but somehow we think that if we turn our back to our problems that they will magically disappear.  This is not the case, especially when you are in debt.  The best thing that you can do with debt is to confront the issues head on.  Many people who can’t pay their bills, avoid debt collectors and credit card company phone calls and letters and just hide.  It can sometimes be difficult to deal with these people, especially because when they call they can be very rude at times, and most people actually wish they could pay back their debts and so usually the debt collectors get mean and the people feel bad.  You MUST face the company, even if it is by letter, and you must create a plan in your own mind for repayment.  Even if you send them $20.00 a month.  Now most companies will tell you this type of payment arrangement is unacceptable, some however, will work with you to bring it to resolve.  In any case, you need to devise a plan to repay it.

Now there are, for your information, some debts that it is not wise to make payment on.  These would be the debts that have already exceeded their 7 years on your credit report.  The reason I am telling you this is because one payment on those debts, and they move their way right back to your credit report again.  Once you make even the smallest payment on them, they will become active and will be back on the report.  Some debts unfortunately when they have exceeded their life on the credit report and still don’t get paid, are better left unpaid. These are the ones that will hurt your credit score if paid. Working to clean up your credit is not always an easy task, however some companies will give you a discounted pay off and will pull the item from your report in exchange for a payment, so don’t hesitate to ask for this.  They can do it for you.

Be sure to face your creditors head on.  Talk to them and try to work with them.  Problems if avoided will only get worse over time, so be sure to address the problems and see what you can do to resolve the issues before they get any larger.