Debt is caused by spending more money than one has, taking out a loan and building interest, or exceeding one’s credit line. Debt is also caused by job loss: getting fired, quitting or being laid off. Sometimes debt is much more than a problem with saving money or keeping track of finances. Debt can result from a gambling problem, substance abuse, or compulsive shopping. Spending money feels powerful for the buyer when the person feels powerless in other areas of one’s life. Constant phone calls and visits from bill collectors make the ordeal even worse. This problem can cause secrecy in the home, such as refusing to answer the phone, or making the family hide when someone is at the door. Children become confused and wonder what is wrong, and the spouse can get angry or depressed because of this problem.

Who is In Debt?
There are two groups of people that are in debt.

  • Group 1 – are the reckless people that don’t care or have spending problems.
  • Group 2 – are the people that make a lot of money, or they are in the middle class, but they all have one common thread – they made a few mistakes and got in over their heads. There are many ways to get in debt, but it’s so hard to get out.

Consumer counseling agencies are just as much to blame. The last thing you need when you have debt or credit problems is someone that is looking to get more out of your pocket. So where do you turn if you don’t have anyone on you side? See our Hardship Programs area for more guidance.

Debt causes an insurmountable amount of stress. Physical symptoms may develop over time: headaches, migraines, digestive problems, nausea, insomnia, chest pain, skin breakouts, body aches, and being more vulnerable to sickness. Stress also has a long list of behavioral symptoms: moodiness, restlessness, irritability, inability to relax, feeling overwhelmed, feeling hopeless or depressed, inability to concentrate, poor judgment, being pessimistic, anxious thoughts, constant worrying, and memory problems. The long-term affects of stress on the body can result high blood pressure and high cholesterol, obesity, ulcers, heart disease, diabetes, asthma, infertility, autoimmune disease, irritable bowel syndrome, and more. All of these symptoms affect the lifestyle of the entire family. Often what happens is a snowball affect: when one area of one’s life falls, the problems become larger and more varied and often exacerbates the first problem.
Fights are more likely to occur in a family struggling with debt. Money is a constant topic in arguments and every other problem seems to stem off from this one issue. Being in the home may feel like walking on eggshells. Everyone is filled with tension and the tiniest thing may set the family off and cause another outburst. Abuse may even occur or get worse when money is the central issue. Paying attention to the children may be lowered on the priority list, especially when one or both of the parents will have to get a second job. This will damage the relationship between parent and child, and they will have to grow up fast in order to become independent at a young age.

Money problems will also cause other problems, such as being behind in bills and getting the heat, water, or electricity shut off. It may also be difficult for the family to afford groceries and necessities for the family. Children may become confused when the television no longer works or when the family may have to sell their possessions. Holidays will become stressful when the family can barely afford to buy gifts or create a nice dinner. Instead of spending time buying healthy food, the family may turn to the quick, stress-free fast food restaurants, further damaging their health and causing other problems.
Debt also creates problems for the family in the future. With bad credit, banks and car dealers will not want to hand out loans. This makes it difficult to buy a new car, a new home, or take out a loan for other purposes. If taking out a loan is possible, the interest rates will skyrocket due to the bad credit. Employers sometimes do credit checks, which will hurt one’s chance of being hired, even if the person is the most qualified for the job. Even if the person is responsible and loyal, the world will now see them as high risk.

Congratulations, you have chosen to take the first step to make you future better. You will feel better about receiving a credit rating that you desire. First, you can make a difference in your credit. You should not need to use any services to make the changes that will help you. These changes are going to take time, and it can be frustrating. It is important to realize that there are no quick fixes. Any legitimate plan to improve your credit will take 6-24 months before you will start to see real results. One of the most frequently ask questions is: Will my credit be so good that I will be able to buy anything? The answer is simple – you get out what you put into it. The extra steps you take for your credit will improve it no matter how insignificant you feel it is. The minimal amount of reading you do on the subject will only benefit you. If you use the information provided from the book and research the info on the quality websites I provided for you, you will find yourself with the information you need to have the credit you always wanted.

I want to cover all the aspects of credit in this book. I will give you valuable information about credit cards, fixing credit, and using credit responsibly. Being in debt affects more than just your financial life. It creates stress and can be a time bomb in a house full of your loving family. It is important to take care of your debt for the betterment of your family and your self.

The Fair Credit Reporting Act:
This Act regulates the collection and use of your credit information. This law protects the information of credit card holders. Consumer Reporting Agencies have to abide by several rules, entitling you to certain rights, including one free credit report each year, and defining how long negative statements must be displayed on your report. This law also forces companies and employers to notify you if they have read your credit report and act negatively from this information.

Fees:
Have we become so reliant on credit and cards that we are a victim of our own convenience? The banks are taking a full press on our money. The return check fee once was only 12.00 dollars. I can see what has changed. Everything is more automated and should be cheaper. But is the bank passing the cost of doing business and the risk on to its customers? The banks bait you with convenience and charge you later. The best example is the Automatic Teller Machine (ATM). This use to be a free service to all banking customers, but now it has become big business. If you make $40,000 a year, your bank is making $3600 a year. This may be a low number for many. But now your local businesses have jumped on board and started to charge fees anywhere from .25 cents to a whopping .99 cents to process your debit card for your favorite meal. You need to ask yourself when is the last time you cancelled a transaction for a fee? We as hard-working customers need to draw the line and take our money back.

Inflated Cost Of Living:

  • Restocking fees
  • Money transfer fees
  • Growing gas prices
  • movie tickets
  • Energy cost

Hardship Programs:
If you don’t have any money to pay or get into a spot that you can’t get out of, the best way to look at your situation is to realize this is not going to get fixed over night. And when you are starting to accumulate debt the best thing to do is to call the companies that you owe money and start working on all the details. This is best done if you got all the bills together and get a number that you can pay and work with the creditors. Most companies will appreciate you trying to settle your debt even in a difficult situation.

Negotiation:
A good rule of thumb here is 50% of your total debt. Most collectors will settle the debt at this rate, and some will go lower. The best time to contact them is at the end of the month. Do not settle for more than you have.. Cutting your self short is the worst thing you can do. Start low and take your time. Do not feel rushed even when you are being rushed by the collector. Do not be intimidated.

Opt. Out:
Going underground is not a fool proof idea, but it is effective. There is some other stuff you can do to make this a better plan. Once you quit paying, you must save your money. Your creditors might not give up on you as you give up on them.

Paying Bad Debt:
Here are some helpful hints and things you need to think about before making up your mind to pay.

  1. What is the statue of limitations for your state?
  2. Depending on the time frame, how much is the debt going to settle for?
  3. Many experts suggest to never settle a debt that can not be removed. This might be the only chance you have to settle for deletion. The collection agency has little power to change your credit history as far as the credit.

Paying old debt:
Many people pay old debt out of guilt, but this is the worst reason to pay the debt. If you are looking to make amends for your old debt make sure you call the place you made the debt at the first place. Two things they

are likely to tell you:

  1. The debt was sent to collections and you need to contact them
  2. We are happy to help you!

The first is the most likely to happen, and now you will have to pay a collection agency instead of the company. You will have to pay the debt in a time frame of 3-6 months. The figure is likely 30% to 60% of the total debt. This number decreases after the debt ages a year. After 24-60 months you are being sold for pennies on the dollar. So, when you paying, you are paying to the highest bidder.

Stop Getting Calls:
The law allows you to make those annoying phone calls stop. Your phone will stop ringing off the hook! If a collection agency is over stepping its boundaries and calling you night and day, then send a “Cease and Desist Letter.” You can find a pre-written one online. Send this to the collection agency, and it will truly stop them in their tracks. Only send the letter if the collectors are being unruly and abusive.

Record phone calls:
*There are many laws to follow here. First, you need to look up the laws for your state on recording phone calls. Then, tell them you are recording the phone call. This often will lift the quality control and your experience. People do not like threatening people when they are being recorded. This will move the control back into your hands, and they will be more careful when talking to you. If they have a problem being recorded, tell them to hang up.

Credit Repair Facts:

  • Your score is not going to change over night.
  • You are having good success if you change your Score and have 3-5 removals.
  • Will everything come off you credit that is bad? Unfortunately, this is not likely to happen, but with some time (12- 36 Mo.) and work you can have some good results. Beware!

Since we can not list the credit issuers here we are just going to have to give you the warning signs. We know that most of you out there want credit, but in the long run it just is not worth it. If you have to pay something up front (even if they are going to help you out and put it on your balance) Any interest rate over 12% -24.9% this is too high to practice responsible borrowing