Credit Card Blog & Article Area
Blog Post Date: Oct 18, 2005
PAY YOUR DEBTS!!
I am the first one to say it.. if you signed a contract, you owe the money, you agreed to it, pay what you owe.
The integrity of a nation is based on things like paying what you agreed to. Integrity is not based on defaulting on payments because they're too hard to make.
This article Problems with debt settlement companies talks about the problems of debt settlement companies. There have been some FTC issues with debt settlement companies.
It goes against the grain that people would want to settle their debts at 35%-50% of the agreed principal amount.
According to http://credit.about.com/cs/economics101/a/031203.htm
(I assume this article is dated March 12, 2003)
• BusinessWeek says that total household debt in the US was more than 100% of our disposable annual income last year. Now that is scary.
• The total consumer debt is at 1.7 trillion dollars. Apparently is close to $2.2 trillion in 2005
According to another source, American's default on between 5-7% of it's debt on a yearly basis.
This means that
$2,200,000,000,000 ($2.2 trillion) x 5% =
$110,000,000,000 ($110 billion)
defaulted each year. (Of course these are approximate figures)
These are $110 billion dollars that that the creditors have to try to collect from people. I'll have to research what percentage of these dollars
are due to bankruptcies and what percentage is because of people simply not paying.
These $110 billion dollars the creditors have to build into their price of credit.. ie high interest rates.
On the one side, the creditors are some of the most aggressive marketers in the U.S. Stuffing credit down peoples' throats.
People are addicted to credit. They love their credit. They love buying stuff. All of the big box companies such as Walmart, Home Depot, Loews, Circuit City, Best Buy etc are built on people's credit cards. Consumer debt. Consumerism. Don't even get me started about people shopping on the internet.
How can you help but not get hooked into the consumption spiral? You've got to be pretty strong willed to resist it.
Getting back to debt settlement:
People are in an age of what I call "mechanical debt". Almost all consumer credit these days is mechanical. It's computerized.
The credit card companies are willing and able to sell this much debt because it's all computerized, non-personal and mechanical.
PEOPLE AREN'T MACHINES
Meanwhile, people are flesh and blood. People are not mechanical.
I liken this mechanical credit card problem to "people running behind their car for five miles at 60 miles per hour." Your car is a machine. You are not. You can't keep up with your car.
Similarly, your body and mind are not machinery. Your emotions are not mechanical.
You get stuck in this mechanical debt world and sometimes it's pretty hard to keep up with it.. especially if you get behind.
Sometimes life gets pretty hard, and you get exhausted by it all. You're so exhausted that you're just struggling to keep your job and keep your family together. If you get behind in your credit payments, you start to get collection calls. This is more exhaustion.
CREDITORS ARE FULLY MECHANIZED
If you don't make your credit payments, the creditors and collection agencies electronically report your missed payments to the credit bureau. They don't care about your exhaustion because they report mechanically, with their reporting machinery.
Once again, your body and mind are not machines. At some point they're going to give out and collapse.
That's where bankruptcy and debt settlement come in... people NEED relief.
Finally, it may take a few generations or so for people to learn to properly manage their debt in this mechanised world.
Currently people are dropping out. They've learned that they've taken on too much debt. They're exhausted. They just want out.
Want out?
Articles from October 2005
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