It is extremely easy to get into a cycle of debt that gets to be so deep that they can not find a way
out of it. Credit card companies approve thousands of applications each and everyday. They even approve
applications to people who already have bad credit. The reason they do that is they can charge the person
with bad credit a much higher interest rate than someone with good credit.
This means they get more money to improve their bottom line. They feel the risk is worth it for the
amount of money they stand to make if you make the payments. Another example is the fall out of the
sub-prime mortgage industry. Lenders loaned money to anyone and everyone they could to but houses when
rates were in the 4% and 5% range during the early 2000's.
When those rates went up people had not planned for the increase in their payments. So as the rates
went up, people were unable to afford to pay for their house. This led to the huge amount of foreclosures
around the country. You see, the creditors were looking to make as much money as they could. Now that
they are in trouble for making bad loans, they are seeking protection from the government in the form of
a bailout. They knew when they made these loans they were not in the best interest of the person
borrowing the money, but they were concerned more about their bottom line, than helping the client.
As a whole our society lives beyond its means. This is exactly what credit is. It is a company saying
we know that you can not pay for this right now, but we will let you live beyond your means and pay us
over time instead of paying cash right now. Most of us live this way, me included. The credit industry
would have us believe our credit problems are all our fault, and they bear no responsibility. But let's
look at a few facts about the credit industry.
Credit cards are marketed to people at younger and younger ages. It is common place for college
students at 18 and 19 years of age to receive the applications. It's not uncommon for high school
students to receive credit card offers.
Solicitations by mail are one of the most effective forms of advertising companies. The average
household receives 30 credit card solicitations a year.
According to the Federal Reserve, an estimated 6.05 billion direct mail solicitations were sent by
issuers in 2005 alone.
According to BAIGlobal, a direct mail tracking service, 3.5 Billion offers were mailed in 2000.
Credit card offers often come with no or low interest rates for the first 6 months, then increase
significantly after that.
Creditors want us to believe that the only way to get out of financial trouble is to file
bankruptcy. They want you to believe that so they can keep you paying even when
you are no longer able to do so. Nothing could be further from the truth. There are alternatives to
filing for bankruptcy. There are a lot of guides that you can find online that offer
alternatives to bankruptcy.
The following are examples of options available to you other than filing bankruptcy. There are a lot of guides on the market that will teach you to do this
yourself, saving you hundreds in fees to attorneys or credit counselors.
1. Debt roll-up
2. Debt consolidation
3. Credit counseling
4. Bankruptcy
5. Debt settlement (or debt negotiation)
Some of the guides available are free, and some are going to cost money. Typically the guides you have
to pay for will have the best and most up to date information available. You can find various guides and
more information about alternatives to filing bankruptcy and general credit information.
