How To Eliminate Your Debt

I do post a lot about why it is bad to use credit cards and debt. You might wonder why there isn't more about getting out of trouble if you are already in it. There are a lot of websites and other resources that claim to be able to help you, and you certainly need the help. I have been in trouble myself since my business failure in 2001, and found it impossible to catch up. Yet I still get credit card (requires Adobe Reader) solicitations in the mail.

I have tried debt consolidation with mortgage loans (scroll down to "Mortgaging the Future"), only to find that I can now barely make my mortgage payments.

I have tried the debt elimination programs because the business charges to my credit card accounts were legal but without my consent (yes they can do that), only to find the programs were not what was promised. I desperately needed a legal position to fight the credit card company's unfair treatment.

I have looked into debt counseling, only to find the vast majority of the programs are scams. (I wonder how congress will handle this problem, now that they have mandated counseling before bankruptcy.) I hope they won't push consumers into becoming fraud victims. For many of the non-profits, they are funded by credit card companies who pressure counselors to steer consumers away from bankruptcy even if it is appropriate, and encourage long term payment plans that don't solve consumer financial problems, and often make them worse.

I have considered bankruptcy, only to find I have to file Chapter 7 or find myself becoming a statistic of Chapter 13 (75% currently fall out of bankruptcy protection from default, a direct result of court mandated payments that are too difficult to maintain for 3 to 5 years. The new law recently passed will probably increase failures close to 100% with tougher repayment standards.) Chapter 7 would be too harsh on my family, and it just isn't appropriate.

I have tried negotiating, and found credit card companies unforgiving and litigious. Look here for their latest move to push people already on the edge into financial ruin. Citibank would not accept less than 80% of the balance in settlement, the alternative was litigation. With increased collection power given to credit card companies in the new bankruptcy law, they will find it more profitable to pursue litigation in the future.

So there isn't much for me to recommend, except try to settle. If that doesn't work, beg for mercy. If that doesn't work, let them sue you, then file a response denying all claims and wait. If they follow through, file bankruptcy chapter 7, but do it before October (requires Adobe Reader) this year. Get a fresh start and never use another credit card, and stop using debt. Write your congressman and senators as well as the Office of the Comptroller of the Currency, and complain about lending abuse. Educate yourself on the corruption in Washington. Put simply, debt is a trap. It has snared both our government and it's citizens.

Sorry I don't have any easy answers. All these companies selling solutions to debt, are just capitalizing on your misfortune. Even the non-profits are frequently fraudulent. Subprime mortgage lenders are notorious for abusing consumers. You also get targeted for every MLM and business opportunity scam out there, promising to solve your debt problems. The problem is that if it sounds too good to be true it probably is. Take that advice from someone who has tried them all, and only made my situation worse. My wife will vouch for that. There is no easy solution. So the only sure thing you can do is change your attitude toward money. That's what I am doing. Learn what the scriptures teach about money. That is what I am trying to deliver on this blog and in the book I am writing. Just the TRUTH as I have found it.