Tapping into your home equity or your retirement account to pay off credit card or other unsecured debt is always a bad idea. It seams like more and more lenders and other financial services companies are encouraging you to do both. Don’t do it and here’s why:

Home Equity Loans to pay off credit card and other unsecured debt –

Sure, it’s advertised that using a home equity loan or line of credit is an easy way to get out of those “high interest rate” credit card debts. The logic is that the home equity line of credit or refinance loan (debt consolidation loan) interest rate is lower than the interest rates you would be currently paying on your credit cards. You save money. Great! The second rational is that the interest rates on the line of credit or home equity loan is usually tax deductible. Greater still! You save more money.

Based upon the above, many Americans have taken advantage of these types of loans to pay off their credit card bills. Actually, by the end of 2004, the Federal Reserve reported that Americans borrowed a total of $826 billion dollars against the equity in their homes. To put that into perspective, in 1997 (just 7 years earlier), Americans borrowed $416 billion dollars. That’s about a 50% increase in borrowing.

So, why are so many Americans still in debt? …continue reading the article titled Two of the biggest mistakes you can make when paying off credit card debt:

Like so many American families living paycheck to paycheck that don’t have adequate savings or access to conventional credit cards, getting a payday loan for those “unexpected” expenses can become a real nightmare. Although it may seem like a good idea it really isn’t.

As anyone that has gotten caught up in this cycle can tell you, the main problem is that the money for your first payday loan is paid back by your next paycheck. That leaves you with less income and puts you behind on your usual expenses. So, it’s easy to see how people either go back to get another loan or renew their existing one. This not only keeps you in the hole but makes it very difficult to save money and break the cycle.

How about the costs? …continue reading the article titled Payday loans can be a vicious cycle…

There are many telltale signs that will indicate you may be headed for debt trouble. I have gathered about a dozen areas for you to look at. If you answer yes to a couple of them, be warned.

1. Are your credit card balances rising while your income level has stayed the same or has decreased?

2. Are you only paying the minimum or less than the minimum balances …continue reading the article titled Financial trouble ahead?

As part of my job, I come across many different debt settlement and credit counseling companies advertising creative. A current trend that I have seen is the touting of the new bankruptcy law. The creative informs the consumer that filing for bankruptcy is nearly impossible or isn’t allowed anymore. Their lives would be ruined, etc. That’s simply not true.

Some major factors propelling bankruptcies for the past decade are still existent today. In almost 50% of all consumer bankruptcy cases filed, medical bills were a factor. About 41% of all moderate to middle income consumers are either uninsured or underinsured. That’s up by 28% since 2001.

More and more you are seeing credit card interest rates with no caps. The new provisions with most credit cards being issued provides that; if a consumer is late on a single payment (it doesn’t have to be with that issuing lender), the interest rate penalty can sore above 30%. People who are already facing medical bills or an unexpected job loss now further burdened with huge finance charges (they add up pretty quickly) will find themselves unable to keep up with future payments.

Even though the bankruptcy laws have changed, it is not impossible or more difficult to file (there are a few more obstacles but I wouldn’t call them difficult). If you do file for bankruptcy, you life is not over. Here are some things you should know about filing for bankruptcy:

1. All of your debts are not wiped out in a Chapter 7 bankruptcy. There are certain types of debts that can not …continue reading the article titled Sometimes filing for Bankruptcy just makes sense