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:

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

I HARDLY EVER RECOMMEND THIS TYPE OF PROGRAM. However, some of you have asked me to explain a little bit about Credit Counseling as a way to get out of debt and how it works.

Credit Counseling was actually created and is funded by your credit card companies. Initially, it was a way for them to recover money from people who were not making payments. Instead of losing that money or spending more money (through collections and lawyers) to try and recover it, they created a “safe” place for a consumer to go so they still get something. Actually, they get all of the balance owed and interest. It has now evolved into a billion dollar industry.

Normally, a credit counseling company will negotiate a reduced interest rate on your credit cards (your creditors would have to accept this proposal and may not reduce the interest rate at all, it all depends on your financial situation and the credit counseling company’s relationship with your creditors). Most often than not, most credit counseling companies usually have a pre-arrangement with the creditors. They know how much the creditor will reduce the interest rate by, how much they will get at their “fair share” of the monies collected, etc.

On average, you can expect to pay back your entire balance at 6-12% interest. …continue reading the article titled Consumer Credit Counseling

90% of all credit cards being issued today come with a variable interest rate. As the Federal Reserve hikes short-term rates, so shall the credit card companies.

Between February 2005 and January 2006, the Fed raised short-term rates by 2 percentage points. During that same timeframe, the average credit card interest rate went from 12.84% to 15.75% a nearly 3% increase. You can expect to see these rates continue to rise.

With the forcing of many credit card companies to raise their minimum required payment formula (borrowers are now required …continue reading the article titled Some Credit Card Trends that can Cost You

Many people have asked about the new Bankruptcy Law changes and how they would affect someone thinking about filing. The short answer: It will cost you more time and money in connection with the filing of a case, but that’s about it.

Here is a brief overview about Bankruptcy and the new law changes:

For the average consumer there are basically two types of Bankruptcies that are available to them. A Chapter 7 (straight Bankruptcy or referred to as a liquidation) and a Chapter 13 (often referred to as a reorganization). Below is a general overview and is not intended as legal advice. You should always consult with an attorney prior to making any type of legal decision. Filing for Bankruptcy is never pleasant and should always be considered as a last resort. Although your credit profile will be affected for 10 years, there are programs out there that are specifically designed to assist a post-discharged consumer with restoring and rebuilding his or her credit profile. Your attorney can discuss this as well as other options with you. Make sure they are in good standing with their Local Bar Association and shop around. Price isn’t as important as comfort in my opinion.

Chapter 7 bankruptcy is designed for …continue reading the article titled New Bankruptcy Law changes –

Hey, don’t just take my word for it.

Let’s face it we all know that the only one that is going to get you out of debt is you. There are several ways to do it. Most think that Debt Settlement (third party negotiations) can’t be done or that credit card companies don’t recognize this as a legitimate solution.

That is simply not true. Did you know that even MasterCard recognizes debt settlement as a legitimate option for individuals looking for help with their credit card debt?

If you go to their website or simply follow this link to read what they have to say about debt settlement: http://www.mastercard.com/us/personal/en/securityandbasics/debtknowhow/payoffyourdebt/index.html

Most people don’t understand all of their options. …continue reading the article titled Debt Settlement is a recognized solution for those who need help with their debt.

Read the entire article to understand why.

For over 8 years, congressional backers, banks and credit card companies pushed to get bankruptcy reform on the books. Who has this really helped?

Last year the new law went into effect. The pushers of this law said it was needed to help curb the massive abuse of people who filed for Chapter 7 bankruptcy as a way to simply walk away from their debt. Opponents said the changes would be especially hard on low-income working people, single mothers, minorities and the elderly and would remove a safety net for those who have lost their jobs or face mounting medical bills.

The law bars those with above-average income from Chapter 7 — where debts can be wiped out entirely — except under special circumstances. Those deemed by a new “means test” to have at least $100 a month left over after paying certain debts and expenses must file instead a 5-year repayment plan under the more restrictive Chapter 13.

In addition to this “means test”, an individual wishing to file for relief under Chapter 7 must first seek credit counseling services and receive a certificate of insolvency.

Basically, anyone seeking to file a Chapter 7 bankruptcy has to go to a credit counseling service that interviews the individual and conducts an analysis of their overall financial situation to determine if they truly can’t afford to pay back their debts.

As you well know, the credit counseling industry is funded by the credit card companies. How convenient. Fortunately, …continue reading the article titled If you find that you are in financial trouble, look at debt settlement as your first option.

A recent study by lawyers.com showed that nearly half of all Americans do not have enough in savings to live for three months if faced with an unexpected job loss or medical emergency.

For those people earning 35k or less, 19% of them said that they had no liquid savings, compared to only 4 percent of those who earned more than the 35k a year.

In addition, those who actually have some savings are increasingly more likely to spend it on daily living expenses, instead of paying down or eliminating their debts.

Of those people with savings, about 27% reported that their last savings withdrawal of $100 or more was to cover normal living expenses, while only 16% used it to pay off debt.

The survey shows that any change in gas prices, for example, or in any other market (an increase in interest rates from their adjustable mortgage, the new minimum credit card payment requirements with most credit card companies) can devastate those consumers financially.

If you find yourself scrambling to make ends meet or just want to learn more about your financial options, log onto www.debtreliefoptions.com.

Jon Noble
Staff writer
Debt Relief Options
asktheexperts@debtreliefoptions.com

Dear Mr. Smith, thank you for your response to my offer. You are approved and here is your money! Oh yah, here is what you agreed to by accepting such a generous offer made by me and my distinguished associates.

1. You can’t sue me or be included in any class action law suit against me.

2. If you miss a payment to someone else that you owe money to, even if you’ve made all of your payments to me on time, I can charge you a higher interest rate for that.

3. I can change the terms of our agreement, anytime that I want to.

4. If you pay back all the money that you owe me, I can charge you an additional fee for that.

5. If you pay me back and you continue to not owe me money anymore, I can charge you a fee for that.

Being a “Shylock” with these terms and conditions….Illegal

Being a Credit Card company with these terms and conditions and having Congress in your back pocket….Priceless

Plain and simple. Over the past 15 years that I have been in the debt and credit industry, I have read countless articles and have met with thousands of people effected by the credit card industry that I am litterally sick and tired it. The credit card industry has been set up to take advantage of uneducated people who have been barraged day after day with ads and offers telling them that without credit, they can’t live like they should be. “Life takes Visa. You live life, we’ll help you” or some moronic statement like that I keep seeing while watching this year’s Olympics. Actually, I get to watch about 10 minutes of Olympic coverage and get to spend the next 5 minutes watching stupid pitches like this.

In this article, I am going to go over some real facts that are in these credit card company contracts and hopefully someone out there will see that this is one of the most underhanded, unregulated, profit mongering businesses out there today.

Here is some “did you know” that hopefully get’s you as angry as I am. Now on a positive note, so we don’t hurt some people’s feelings out there, credit cards are a tool that if used correctly can give you some advantages. Yah, about 5% of the American population falls into that category.

1. Chase Manhattan Bank’s cardholder agreement plainly and clearly makes you agree to give up your right to sue them: “the cardholder cannot take the issuer to court or be included in a class-action suit against the company.”

Wow, the tobacco companies should have had these lawyers on their team…Hmm, let’s see. Sorry Mr. Jones, it clearly states on the underside of the cigarette pack that you purchased, in size 3 font: “By purchasing these cigarettes, you agree that you cannot take the manufacturer of these cigarettes to court or be included in a class-action suit against the company.” I guess that was their big mistake. The warning label only states that you could die, it didn’t say anything about not being able to sue them….

2. Banks and credit card issuers spent millions, yes millions, of dollars lobbying Congress …continue reading the article titled Credit Card Companies are “Shylocks”