“Dear Steve,

My husband almost died due to an abscess on his liver. Medical bills piled up. Then he lost his job. Then I lost my job due to budget cuts. Currently my husband is unemployed, and I am working, but for less than my last job. Credit cards were used for everyday items such as food. Had been paying them off monthly at more than minimum. Then, credit card companies raised APR percentage and minimum payments to even more than had been paying them off at more than minimum. Could no longer afford monthly minimum. The credit card has spiraled out of control due to finance charges of $400 a month.

How do I get the credit card company to lower payment to what I want. I can afford $400 a month to pay them off. That is it. There is no more in the budget than that, and that is even with cutting down on food, electricity, etc. I am more than willing to close the account. I have been talking to them for 3 months now to no avail. I want to get rid of this debt!!!!!

Sally”

The Answer:

Dear Sally,

Actually, while you think it makes good common sense for you to enter into a repayment plan that you can afford, sadly the creditors don’t really care. Creditors look at acceptable repayments as what they want, and not necessarily what you can give.

If you’ve already been communicating with them and they have not proposed anything substantial that will work for you then you have three options.

1. Credit counseling or debt management programs may reduce your payment if you are currently behind. Click here for debt management information. Your payment will be calculated by the creditor formulas that the creditors dictate to the credit counseling groups and not what your budget allows. Talking to a debt management company is a good first step to take to see if it is a solution that will work for you.
2. Bankruptcy is a legal and logical option if you just can’t get by each month anymore. Sure bankruptcy is painful but so is just making it from month to month without getting ahead at all. Talk to a bankruptcy lawyer and find out what your options are in bankruptcy.
3. Keep paying the minimum payments or pay the cards off in full. Sure, this approach just leaves you on a treadmill and does not change anything but it is an option if you are not ready to take more drastic action like a debt management program or bankruptcy.

As it stands now, you are perfectly situated to make the creditors a maximum amount of money from jacked up interest and fees. They’d rather see you do that than let you jump down to a payment to better fits your budget. One thought is that they try to extract their pound of flesh, and as much as possible, before you stop paying or go bankrupt so they are going to push you as much as possible before you eventually default.

Big Hug!

@GetOutOfDebtGuy

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Read the full article at GetOutOfDebt.org, click here: How Do I Get the Credit Card Company to Lower My Payment to What I Want? – Sally

“Dear Steve,

Poor, Poor, Poor money management!! I need some direction on what to do. I am terrified of bankruptcy, and want to do anything to avoid it. I have read a number of things on your web site, which I truley appreciate, and you have talked about the failure rate of so many people who try debt management programs, but you never explain why so many people fail. I want to get out of debt, I want this massive monkey off my back, and I am just looking for some real advise that I can beleive in. Would love any kind of feedback.

Thanks,

Chris”

The Answer:

Dear Chris,

Debt management fails because the extended repayment plan is not based on what is reasonable, affordable or sustainable for you. It is based on what the creditors want, which is just about the same each month as you are paying now. But if you could make that payment, you’d do that now.

Creditors want to see your budget that the debt management company will create for you and creditors don’t like to see that you are saving money in an emergency fund instead of forking over everything you can each month.

Because the repayment plan does not include a savings component all it takes is one unexpected big expense to throw you off track.

The ultimate issue here is that I feel like you are trying to bargain for a solution that you want on an emotional level, and not a solution that is best suited to your situation.

What I hear you saying is that you don’t like bankruptcy, for whatever reason, but that you’ve also discounted it as a possible solution based on your biases about what bankruptcy means to you.

Making an appointment to go in and talk to a bankruptcy attorney is free, asking all your questions is free, learning if bankruptcy is an appropriate solution for you is free. The only thing you will walk out of that appointment with the bankruptcy attorney is knowing the facts and be better informed to make a decision that is best for you.

I’m not telling you or suggesting that you go and do anything you don’t want to do. I’m simply suggesting, urging, that you get the facts first before you start erasing possible solutions.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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Read the full article at GetOutOfDebt.org, click here: I Really Screwed Up And Need Some Direction. – Chris

So many, too many reporters and writers recommend debt management programs and nonprofit credit counseling as a way to get out of debt, but why?

I’m afraid the answer is that they always have and suggesting a nonprofit credit counseling solution seems harmless and better than offering the alternative, no real solutions.

The credit counseling industry, it is an industry designed to make money by collecting money from you and returning it to the creditors, is basically flawed.

While other industries are striving more for openness and transparency, that is exactly what the nonprofit credit counseling industry does not want. The more secret the better.

The critical information that is never given to consumers is that which could be used to judge the effectiveness of individual credit counseling programs in aiding people in debt.

Granted, on one hand, success in credit counseling can be a bit difficult. For example, if it is better for you to go bankrupt and you are instead talked into a debt management program, is that a success or failure?

Credit counseling programs are generally measured by creditors on their effectiveness to collect money from consumers and to keep you paying as long as possible. Non-profit credit counselors can be financially punished if their collection quotas or performance drops below a certain point. The reality is that while the credit counseling groups wear a not-for-profit costume they are controlled by their funding source, the creditors, and essentially fee for service debt collectors.

It is a sick and incestuous relationship that screams to be changed. It seems ridiculous that reporters and journalists continue to praise credit counseling groups and sending people to nonprofit credit counseling groups and yet little to no print has ever been spent on the effectiveness of a credit counseling debt management program.

As a holding tank while you are deciding what to do or putting together a more permanent solution, credit counseling can be an effective temporary tool. But the secret that non-profit groups don’t want to openly share is that 75% or more of people that enroll in a debt management program never successfully complete repaying their debt in the program.

Sure, there are some success stories, but the majority of people will stop paying, drop out, or go bankrupt before ever repaying their debt in a nonprofit credit counseling program.

If you don’t believe what I’m telling you then I challenge you to ask your credit counselor for a report about their success rates and you’ll see just how open and transparent they really aren’t.

Other Related Articles to Read

• Dave is in a CCCS Credit Counseling Program But Feeling Hopeless
• How Do I Get the Credit Card Company to Lower My Payment to What I Want? – Sally
• How to Shop for a Good Debt Management Program
• I Really Screwed Up And Need Some Direction. – Chris
• Lauren is Searching For Ways to Get Out Of Debt And Make Her Bad Credit Go Away
• Trish Says “Credit Counselor Is Going Out of Business And I’m Late On Payments”
• AK Wants to Use His Credit Cards to Consolidate His Debts
• Eva Has Heard Negative Things About CCCS
• Government Help With Credit Card Debt
• April Wants To Know “As A Single Mom, How Do I Get Out Of Debt?”

Read the full article at GetOutOfDebt.org, click here: Is Debt Management and Credit Counseling An Effective Way Out Of Debt?

A question I am getting asked more and more is about what programs the government offers to help you get out of debt or to eliminate credit card debt. These questions usually involve inquiries about government grants and loans that people hear whispers about that they believe will dispose of problem debt as well.

Up until this point there has not been any interest or benefit to government to eliminate credit card debt through any sanctioned or legal process other than bankruptcy.

The elimination of debt seems like a public service that government could fill to help remove the weight of burdensome debt from the backs of consumers in trouble. But there is little logic behind the idea unless the government wanted to offer a bailout of consumer credit card debt in order to encourage consumers to resume their enthusiastic embrace of shopping and consumption.

Our capitalistic society operates in a symbiotic relationship between banks and consumers. Consumers consume, that drives orders, orders drive production and loans and credit cards help to fund both production and consumption.

The only remote connection between government and help to eliminate debt I guess would be the IRS recognition of non-profit credit counseling groups that offer debt management programs that make an attempt to assist consumers with problem debt.

Outside of that, let me be perfectly clear, the government, in particular the Office of the Comptroller of the Currency (OCC) actively blocks any government programs to eliminate debt. You can read more about recent efforts and blockage by the OCC here.

There are good reasons why the OCC blocks these attempts at consumer debt reduction since recently suggested plans have favored banks and have not been transparent to regulators and investors.

A government sponsored plan to eliminate debt and eliminate credit card debt could be crafted, I do see a way that it would be possible, but not only is there no such program but there is nothing on the drawing table as well, yet.

The good news is that I might be able to help you find an answer to your dilemma and help you get out of debt for free. It’s what I do here on the site. Just ask me your question and let me help you.

@GetOutOfDebtGuy

Other Related Articles to Read

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• Keith Writes in And Wants To Know “Should I Consider Debt Consolidation For a Fee?”
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Read the full article at GetOutOfDebt.org, click here: Government Help With Credit Card Debt