The economic downturn that hit the United States a few years ago has devastated many families. From job loss to foreclosure, many families are struggling to make ends meet. And, many families are doing whatever they can to pay their bills; even to the point that they may not realize that what they believe is debt relief is actually making their debt matters worse.
Barnkrate.com offers some signs that may indicate that people are in or getting deeper into debt trouble:
- Credit card balances are increasing and income is decreasing
- Only paying the minimum amount due on bills each month
- Using new credit cards or cash advances to pay existing credit card debts
- Possessing an increasing number of credit cards
- Credit cards are close to their limits
- Charging more on your credit cards than you are paying
- Working overtime or another job to make payments
- Creditors or collection agencies are calling or mailing letters
- Using credit cards to pay for necessities
- Using savings or retirement accounts to pay bills
- Job loss has you fearful of how you will pay your bills
Experiencing or engaging in one or a few of the signs occasionally is probably not an indication of financial trouble. However, if one or more of these indicators become a pattern, Bankrate.com notes that financial difficulties may exist.
At time it is difficult to ask others for help. But there is help available when your bills have become overwhelming and everything you try to get out of the financial hole only makes the hole deeper. There are many options for relief, including Chapter 7 and 13 bankruptcy.
After attorneys general from 49 states investigated a slew of reports that banks were using fraudulently signed documents to speed up foreclosures in court the national mortgage settlement was put into place. There were also complaints of wrongful foreclosures and other issues coming from the banks’ improper handlings of borrower’s accounts. The banks, however, are progressing rather slowly.
Few Borrowers Given Assistance
The settlement was supposed to help one million borrowers and give $10 billion to struggling borrowers in the form of debt relief. The settlement went into effect over five months ago and the banks have only helped 7,093 borrowers by writing off $750 million in first mortgage debt. The banks have a total of three years to complete the terms of the settlement, if they complete it in the first year, they receive financial incentives.
Bank of America is one of the five banks, and also the bank with the highest settlement obligations. This bank, however, had not made any changes as of the end of June according to the monitor of the national mortgage settlement. The Bank of America claims to have given $596 in relief to 3,823 borrowers.
The banks say that the majority of the relief so far is coming in the form of a short sale. A short sale occurs when a bank sells the borrower’s home for less money than is owed on the home. The bank then agrees to not pursue any further action on the property.
Some Say the Settlement is not Enough
Within the housing community there are critics of the settlement. They say that the agreement is not enough to deal with the current housing crisis. They claim that only 10% of outstanding loans will qualify under the settlement. This is because the main mortgage holders in the country, Fannie Mae and Freddie Mac, are not included in the settlement.
Critics also argue that they are skeptical as to whether the banks will perform the agreement. The agreement requires the banks to implement changes to prevent errors and help with other issues the banks were having in regards to the mortgages. Attorneys and housing counselors who are now working with struggling borrowers claim that the banks’ compliance with the new rules is not as good as it should be.
Individuals struggling with mortgage debt or suspect fraudulent bank practices as were involved in the settlement should seek help before the problem gets out of control. An attorney is a great resource for struggling borrowers and those who feel as if they are being treated unfairly by their lender to get back on track.
Many Indiana residents are struggling with debts and trying to figure out how to not lose things like their cars and homes to repossession or foreclosure. This had led many to make bad financial decisions that end up doing more harm than good.
For example, many Indiana residents have no doubt heard of zero-balance credit card transfer offers. These zero-balance cards typically allow a person to transfer over a debt and not have to pay any interest on that debt for, in some cases, up to 18 months.
Some hear of a deal like this and decide to pay off their car with their zero-balance credit card. The idea being that as long as the car is paid off before the introductory zero interest rate periods is up, they will actually be saving money on interest charges.
The issue though is that while this may sound like a good idea in theory, in practice there are a number of red flags. The first being that if the car is not 100 percent paid off by the time the introductory zero interest periods is over, the interest charges will actually cost more than if the balance was never transferred.
On the flip side of this, if a person has enough money to be able to pay off the car on the credit card before the introductory rate is up, this person is most likely able to just write a check to pay off the car and never have to deal with transferring the balance and trading installment debt to revolving debt. Besides, changing debt from installment to revolving tends to negatively affect a person’s credit score.
In the end, the take home message is that while there are a lot of great theories floating around on how to take care of financial situations, it is important to talk with an experienced debt relief attorney before making any rash decisions.
In our last post we focused on the fact that younger Americans are really starting to rack up credit card debt. And while this is certainly true, Demos, a policy research organization, found that Americans over the age of 50 are also really financially struggling with credit card debt.
One 62-year-old woman recently shared her story. After helping her daughters with college, some unexpected medical bills and getting a divorce herself, and also deciding to go back to school, she finds herself paying hundreds of dollars per month in credit card debt. However, these payments are mainly going to interest and she isn’t really seeing the overall balance of what she owes going down.
The study conducted by Demos shows she is not alone. Of those over the age of 50 who are considered low-to-middle class, those with credit card debt owed an average of $8,278. When looking at where this debt is coming from, half rely on credit cards for medical expenses and half use their cards for every day expenses, like groceries and utility bills.
In terms of paying down this debt, many have found it even harder in recent years. Due to the recession, after being laid off, many hard workers were not able to find jobs.
Fortunately, just like anyone else who is struggling with credit card there, there are often debt relief options that are available. These options can result in peace of mind, especially for those who are getting closer and closer to the retirement age.
Many Indiana residents know how credit card debt is. Either accrued over time due to poor budgeting, or relying on a credit card for necessary purchases, having credit card debt can be frustrating and frightening as many borrowers simply do not have the finances to pay back all that is owed.
Having credit card debt is certainly not limited to a specific demographic either. Rather, men and women and people of all ages are finding themselves in baffling financial situations.
According to one recent study, credit card debt among the younger generation seems to only be increasing. In fact, according to the university study, those born between the years 1980 and 1984 have, on average, $5,689 more in credit card debt than their parents did. Compared to their grandparents, younger Americans today have on average $8,156 more in credit card debt.
When looking at what is happening to rack up this debt, there are several factors all playing a role.
One is temptation. Many college students are inundated with credit card offers. For some, the temptation becomes too great. They cave-in and sign up for a credit card. A purchase here and a purchase there suddenly starts to add up, and before even realizing what is happening, these students end up racking up several thousands of dollars worth of debt.
Of course, with the current economy, one also has to wonder if recently graduated college students are finding themselves in the tough position of not being able to find a job after graduation. In those cases, there is no doubt that many start to rely on their credit card. This reliance can rapidly spiral out of control too.
When it comes to accrued debt, regardless of a person’s age, those with credit card debt should know that there are often debt relief solutions available. An attorney with experience handling debt relief can walk a person through those options.