Debt Chemotherapy

For the last 3 years I have been helping people who are being abused by the credit card companies, or they are in a hardship and they enroll in our debt settlement program as an alternative to bankruptcy.

People ask me all the time if it is wise to take out a mortgage to pay off the credit cards. I give them my opinion, which is be careful if you do, it might not be your best choice to pay off the credit cards with a mortgage; here’s why.

Several times a month someone calls and asks if I can be of help with their debt. They took out a mortgage to pay off the credit cards and now they can’t make the mortgage payments. I have to tell them no, we can’t help you; you should not have done that because you took unsecured debt, money given to you with just your signature, and rolled it into your home, which is secured debt.

There is a big difference between secured debt & unsecured debt.

Secured debt is your home, car, or other physical things that you finance. Unsecured debt are credit cards, personal or signature loans or lines of credit. If you miss a few secured loan payments, they just take the home or car.

With a credit card, they can’t take back the movie and popcorn you charged 2 weeks ago.

So if you lost your job or missed some payments, you could loose your home! If you didn’t roll the debt, they can’t do a lot except try and get a judgment or lien against any property or wage garnishment.

However, we have secret techniques we use to get a summons to appear dismissed using their own tactics.

And if you don’t cut up the cards, you will MAX them out again in a year or 2 if you don’t change your spending habits (spending more then you earn), and you will have the mortgage and the credit card payments. Those are the people who call me when it’s too late.

If you are thinking about taking out a 2nd or 3rd mortgage to pay off credit cards, think again.

If you need help with credit card debt, give me a call between 8-5 pacific.

Christopher Winkler
DebtChemotherapy.com

We read that Universities are starting to ban the presence of Credit Card companies preying on innocent young adults. There are no shortages of tricky ways that credit card companies get them to sign up for their cards, including free lunches. Remember, there is no such thing as a free lunch. Now they are at the mercy of the creditors and they can blast up the interest rates to 30% for no reason at all.

What’s more shocking is that ABC news reports that 43% of undergraduates have at least 4 credit cards and owe over $2,000! Some people have committed suicide over credit card debt, which is really sad, because it’s just funny money.

If you are young, they don’t teach you anything about managing your finances in school, so here are a few tips to help:

1. Build your credit score by getting one card and using it occasionally, and keep the balance low.
2. Don’t let your parents pay for your credit cards. It does not teach you responsibility, and leads to irresponsibility in the future. It’s your debt, if you don’t want to pay it, don’t charge it; use cash. This is not free money.
3. Pay your monthly bill before the due date to prevent fees and increased interest rates. It’s important to give it time to get there if you mail it. The best way is to pay online so the payment is that day or next.
4. Set up checking and credit cards at a school credit union, because the interest rates are usually lower and they don’t raise them as high as the credit card companies. Then set up an automatic payment of say 5-10% of the balance, this way you won’t forget.
5. Be frugal; don’t buy what you don’t need & pay cash when you can.

Keep an eye on your finance charges & if they start going up, call them to complain and keep trying until they lower the interest, though don’t close the account, as it will lower your credit score because you lower your available credit and raised your debt to income ration. We will explain this in detail in a future post.

Christopher Winkler
Debt Settlement Expert
DebtChemotherapy.com

You have seen the commercials about Debt Settlement, heard the radio ads, and seen it mentioned online. You are starting to get overwhelmed with your credit card debt, and those &^%$’s raised your interest on your biggest card to 29.9%!!! All of a sudden, you look at the finance charge and it is most of the minimum payment.

You will never pay this off in this life time. You are considering talking to someone about debt settlement and you have read some negative comments on forums and online about debt settlement and you just want some answers.

We believe the Credit Card companies really don’t want you to know about Debt Settlement, though they do settle for less than what you owe them. Hell, MasterCard even says on their own website, under the category called Learning Center that it’s an option for people that need help.

It’s buried deep, deep under MasterCard’s Personal Cards/Learning Center/ Debt Know-How/Solving Problems By Paying Off Your Debt/Debt Reduction Settlements.

Credit Card & Debt Reduction Settlements

Depending on your circumstances, your credit counselor may be able to negotiate a debt reduction settlement with your creditors. Under a debt reduction settlement, a creditor agrees to reduce the amount you owe in return for a guarantee that you will pay off the reduced amount at specified terms. This process also is referred to as third-party debt negotiation.

The criteria for qualifying for a debt reduction settlement are the same as for a DMP. The settlement can include credit card and other unsecured debt, but not mortgages, auto loans and other secured debt such as student loans, or legal obligations such as alimony, child support and fines.

Under a debt reduction settlement, the debt is generally resolved within one to three years, with creditors settling for between 20 and 80 percent of the original debt. After you pay the agency fees and settle the debt, you will see an average of 40 percent in savings.

However, watch out for agencies that promise to reduce your debt by 50 to 70 percent. Many of these agencies are not reputable and unlikely to deliver. Currently, the Federal Trade Commission is investigating a number of questionable counseling agencies that make such false promises to consumers (emphasis added).

There you have it, direct from the horses mouth. The credit card companies will accept between 20-80% of the balance. You just have to quit paying them for a few months so they will consider it.

Then, it’s a game to see how low they will go… It’s for consumer credit card debt, and if your businessness has no assets or is out of business, it will work also. It really wont’ work for a buiness that is still operating because they can do nasty things to you and you really don’t want to mediate that debt.

In future posts, we will talk about the not reputable companies that make false promises.

If you are starting to spin into the credit card death spiral, then give me a call during the day to see if Debt Settlement might be an option for you; our mediators are working with over 20,000 clients and manage $400,000 in debt

Till next time,

Christopher Winkler
DebtChemotherapy.com