by Asinus Asinum Fricat
Sat May 24th, 2008 at 08:22:45 PM EST
If you have started this year buried in debt after enthusiastically embracing those pre and post-Christmas sales, Valentine Day, and Easter shopping sprees, think twice when you hear the doorbell! And leave the answering machine on, just in case. It could be a debt collector. And a mean one, threatening legal action.
Credit card debt has grown astronomically in the last 25 years to over $900 billion and is rapidly approaching the trillion mark, and that may have happened already. About half of Americans carry credit card debt: The families average $8,000 to 9,000; the individuals average $10,000 to $12,000, upwards to 50,000 and above.
Much of this trillion is due to borrowing on credit cards, bank loans and some people use their credit cards to pay off the monthly mortgage. And as consumer borrowing increases, so does the amount of people encountering financial difficulty in paying back what they owe. I know it too well, having finally paid off my two credit cards (via a credit union loan), I now only use the business one when I really have to. The news is just as bad in the UK (180 billion plus), Australia (50 billion) and Ireland (30 to 40 billion, perhaps even more as data is scant here). A few weeks ago UK Independent features an article on credit card debt. It makes sobering reading.
More and more Americans are becoming delinquent and are subsequently passed from the original lender to a debt collection agency. To collect due debts most collection agencies will use these three tactics: letters, telephone calls, litigation. Typically, debt collection agencies will begin the collection process by sending a series of notification letters, often allowing the debtor to enter into negotiations to repay the debt.
Trawling the "Internets" it seems that Bank of America Corp. has the highest delinquency volume, with overdue accounts valued at $5 billion. Bank of America defaults in October were almost 200 percent higher than in October 2006. Capital One, American Express Co., Discover Financial Services Co. and those containing "branded" cards from Wal-Mart Stores Inc., Home Depot Inc., Lowe's Companies Inc., Target Corp. and Circuit City Stores Inc. -- also reported striking increases in year-over-year delinquency and default rates for October. Most banks and other financial institutions holding credit card debt on their own books also reported double-digit increases in delinquencies.
This almost hidden line in one of the largest debt collector in the US has prompted me to write this diary:
"The debtor's ignorance is the best weapon we'll have in collections."
When you're facing a mountain of credit card debt, the stress can be overwhelming at times. Repeated collection calls, daily harassment, rude bill collectors, and seriously nasty letters all add to an already intense situation, and if you don't know your rights, it's the road to Hell.
There are some ways to mitigate this road to Hell. First, it's important not to succumb to scams such as companies promising to wipe out 100% of debts, for a small fee. Yeah, right, always remember the adage: there's no such thing as a free lunch! The smart thing to do is to agree to an amount to be repaid within a reasonable (and affordable) time frame. If you can't, one way to ease the burden is to look for government grants. This link here is filled with facts for consumers. And check out a life out of debts and you might sleep better at nights!
The following YouTube vid is worth watching as a cautionary tale (I can't seem to be able to post pics or videos but here's the source).
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And a little trivia for you: the song from Men at Work, "Who Can it Be Now", was written at a time when they weren't famous and were afraid to answer the door for fear of the dreaded debt collector! I know this because I knew them when I was in OZ.
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