Credit Cards » Credit Card News » Finding Your Way Out Of Credit Card Debt
Date May 10, 2009

Finding Your Way Out Of Credit Card Debt

Category: Bad Credit, Credit Card Management, Debt Consolidation, People and Credit

Credit card debt is one of the biggest problems for American consumers nowadays. With rising interest rates and the state the economy is in, credit card debt problems are a dead weight that any credit cardholder would want to get rid of.

Finding Your Way Out Of Credit Card DebtLike any problem, to begin fixing your credit card debt problem, you first need to determine how big the problem is. Unfortunately, some people are not very clear about the details of their credit card debt. Understandably, some people find rummaging through all the fine print and the mathematical confusion that credit card bills carry to be too daunting. However, you will never truly understand why your monthly payments are as high as they are unless you understand the details of your credit card.

Credit card transactions carry many details that credit cardholders need to be aware of. Transaction fees, for instance, are automatic fees that you pay for every transaction. Your interest fees are the interest you pay for your debts. Credit cards also charge fees for any penalties that you can usually find in the fine print of your bills. These are just a few items that you need to be aware of.

One of the best ways that you can help yourself to get out of credit card debt is to consult a financial counseling outfit. There are many financial counseling outfits out there offering their services to help you get out of debt and stay out of it. Some of them are also non-profit agencies that can be very helpful for people who are really tight on their budget. Financial counseling outfits can analyze your credit card debt details for you, explain it to you more effectively, and lay out several steps for you to follow so that you can get out of debt. Consulting them should certainly be at the top of your list if you want to get out of debt.

Aside from consulting the experts, there are also some “common sense” steps that you can take to get out of credit card debt. The most obvious one is to stop using your credit card while you are deep in credit card debt. If at all possible, pay cash. If not, use a debit card instead of a credit card.

You can also call your credit institution and see if they can renegotiate a better monthly payment rate for you. Some banks can offer you better rates, especially if you have good credit standing. However, be careful of offers where you transfer your existing debt balance to a low interest credit card. Although the rates are attractive, you’ll be paying a much higher balance should you miss payment.
Finally, when you are paying your debt, make sure to pay first the card with the highest interest rate. You should also depend more on electronic or online payment rather than through the mail to ensure that your payment does not come in late.

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Date May 3, 2009

Number of People Sued by Credit Card Companies Increasing: Here’s What to Do If You Are Sued

Category: Bad Credit, Credit Card Management, Credit Repair, Debt Consolidation, Money Management, economy

lawsuitIt’s difficult to track exactly how many debt collection cases for defaulted credit card debt are filed because they are filed along with all civil cases through the prothonotary’s office. Capital One, a credit card company known for lending money to individuals with less than perfect credit histories, have filed a large number of cases. In Lancaster, Pennsylvania, of 255 cases filed during the first three weeks of April, Capital One filed 45% of them (a total of 114). Neither the attorney representing most Capital One lawsuits in court, Paul Klemm, nor Capital One representatives returned phone calls from reporters regarding this issue.

Attorneys who have counseled clients facing bankruptcy or credit card defaults have stated that more credit card companies than ever before are attempting to recoup some of their financial losses by taking card holders to court. In previous years, credit card companies would sell off their debts (for pennies on the dollar) to debt collectors and collection companies. Lawsuits, if filed, would be filed by debt collectors – not the credit card companies themselves. Now that the economy has nosedived and credit card companies are having trouble finding buyers for their unpaid debts, they are becoming more aggressive about collecting on defaulted accounts themselves. A successful lawsuit means a greater recovery rate for the credit card company.

The credit card industry states that the changes made by the U.S. House of Representatives on Thursday, April 30th, would cost the industry more than $10 billion per year in interest payments. The figure was obtained through a study by the law firm Morrison & Foerster. Changes to the credit card laws include restriction of interest rate increases and prevention of credit cards given to anyone under the age of 18.

If a creditor takes you to court, here is what you can do to build your case:

Prepare a Budget: list all of your monthly expenses and obligations from utility statements, invoices, receipts, and billing statements and show proof of your monthly income.

Document Medical Conditions: if a medical condition has made it difficult for you to keep up with your payments, or medical expenses are eating up all of your income, get documentation of your medical condition from your doctor(s).

Respond to the Court By the Due Date: do not ignore the situation as it will not go away. If you don’t respond to the court prior to the date listed on your letter, the creditor will automatically win due to your inaction. There are sample response letters you can use online, or call and talk to the court clerk for assistance in how to respond to the court regarding your credit card suit.

Document Changes: many people are unemployed or laid off at this time, which makes it difficult or impossible to pay your bills on time. Get documentation if this has happened to you. Other life changes can also contribute to the inability to pay for bills, from having a baby, becoming depressed, medical conditions, etc. If they can be quantified by doctors or employers, these are all viable reasons and should be mentioned in court.

Document What You’re Doing: If you’ve joined a debt relief solution, such as a debt management company or a credit counseling service, obtain proof from the company. This shows you aren’t just sitting back and skipping out on your bills and that you’re making an attempt to remedy the problem.

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Date April 18, 2009

Who Pays for Credit Cards in a Divorce?

Category: Bad Credit, Credit Card Management, Money Management, People and Credit, credit card news

It’s common for divorcing couples to have credit card debt that must be assigned to one spouse or the other during the divorce judgment. What is often left out however, is protection for each spouse for not being held responsible for any additional credit card debt incurred by the other person – or from having to pay off the credit card debt assigned to the other spouse in the event the spouse doesn’t pay their share of the joint credit card debt.

Are you surprised that this is a possibility? Creditors are not obligated to respect the terms of your divorce judgment when it comes to payments. If you were married when the debt was created, they are legally able to come after you for the payment if it is not paid, even if the divorce judgment assigned that particular debt to your spouse. Prior to meeting with your lawyer to assign debts, it is recommended that you obtain a credit report for each of you to make sure there are no credit cards or accounts opened that one of you are not aware of, to ensure they are assigned appropriately during the judgment.

How to Cut off Liability for Future Debtfinancial-problems

For all credit cards that have both your names on the accounts, you should either close the accounts entirely so that they can no longer be used, or at a minimum remove your name from the accounts that your spouse will continue to use. Removing your name from the account will not relieve you of responsibilities for debts incurred prior to the divorce, but if the spouse goes on to add more debts to the account after the divorce, you will not be held liable for those debts.
If you fail to remove your name from any joint account that is going to be used by your ex after the divorce, the payments (or lack of payments) will be reported on your credit report as well as your spouse – and you will be equally responsible for payments, interest, penalties and any legal fees resulting from the use of that card.

Protect Yourself From Future Financial Problems

One method of further protecting yourself is to insist that any joint account that will be held by your spouse after a divorce be refinanced. This is often as simple as applying for a new card in just one person’s name, and then transferring the balance. The money transferred from the old account to the new account is now the legal responsibility of the person who was assigned that debt in the divorce. If they fail to pay it – it will not fall back on the other person.

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