Credit card debt is one of the biggest problems facing the US today. According to data released by the Federal Reserve Bank, Americans owe an estimated $1 trillion + on their credit cards. This figure is approximately 6.2% higher year on year and rising fast (as at April 2017). The problem with increasing credit card debt is that as balances increase, so too do debt repayments and debt burdens. This is particularly difficult when debt is owed across multiple credit cards with varying interest rates among them.
The problems associated with rising credit card debt are not limited to debt repayments and debt burdens – they go to the heart of mortgage qualification, automobile loan qualification, et al. The higher your debt/income ratio, the lower the likelihood of being approved for additional lines of credit. This becomes an issue when you are contemplating big-ticket purchases like real estate, vehicles, or machinery.
Is It Possible to Pay off Credit Card Debt in One Fell Swoop?
Credit card debt has steadily been increasing since 2013 when it was measured at $682 billion. By 2017, the total value of outstanding credit card debt exceeded $818 billion. The trick to getting ahead is reducing the debt burden on the highest credit card debt. One way to do this is by assessing the APR’s of each credit card in turn and tackling them head-on.
Various tools and resources are available to help mitigate the effects of exorbitant debt, notably credit card optimization tools which allow you to assess the burden placed on your finances by interest rates and other hidden costs. The advantage of paying down high interest debt first is that you are spending less of your money on the interest-related component of the debt and paying down the principal quicker.
Unfortunately, far too many people get into trouble with their credit card debt. At times like this, you may be subject to calls from debt collectors pressuring you to settle your debts as quickly as possible. DebtConsolidation’s guide indicates that 33% of Americans have debt in collections worth an estimated amount of $1,450. Fortunately, debt management is entirely possible provided you use the right channels to deal with these matters.
The repeated phone calls and harassment are not okay simply because you owe money. As a debtor, you too have rights, and it is important to leverage all options at your disposal. A debt collection survey report indicates that 85% of consumers are contacted by debt collectors via telephone. 71% are contacted by letter, 57% by voicemail, and 12% by email. Only 4% are contacted by debt collection agencies in person.
What Options Are Available to Deal with Debt Problems?
Information is your best resource to deal with debt-related problems. The more clued up you are about your rights, duties, and responsibilities, the better. For starters, it’s important not to get scammed by people masquerading as debt collection agencies. Customers should learn to ask the right questions to ensure that they are not being scammed.
For example, the representative on the other end of the line should be able to provide details of the name, company information, direct telephone number, address and other pertinent data. If you know that you have a debt problem, contact the company in question and move swiftly to try and resolve the issue. Companies are often willing to work with customers who are in arrears, and that’s why a payment plan proposal can help you in terms of credibility, and to stop those annoying phone calls.
It is a little-known fact that there is a statute of limitations for credit card debt in the US. In states like Wyoming, this could be as much as 10 years, but in other states, this could be 3 years or more. It’s important to understand the statute of limitations when it comes to debt, since you may not be legally obligated to repay debt if the collection agencies haven’t done a good job of collecting debts. These and other tools and resources can help you to evaluate your personal financial situation, and dispute inaccuracies that may arise. Experts advise clients to work towards setting their debts with their creditors, rather than the collections agency.
43.9% of families have credit card balance-related debt. 67.4% of US families with debt have installment loan problems. It’s always wise to keep copies of letters you send to collections agencies, with dates affixed. You may wish to contact the state attorney general’s office to report harassment, whether online, via telephone, or snail mail. There is always the legal route to follow, but this comes at a cost – both time, effort, and money. Be prepared for the long haul if you’re going to be fighting against debt collection agencies.
