In today’s world many people are finding themselves with credit card debt problems. In fact, the average consumer has more than eight thousand dollars in credit card debt! When this ends up happening, many consumers are faced with the prospect of filing for bankruptcy.
In 2005, a number of bankruptcy reforms were implemented. This action was necessary because many state and local politicians felt that many people were taking advantage of bankruptcy laws in order to get their credit card debts discharged and not have to meet their financial responsibilities.
Consumers who wish to file for bankruptcy in the United States must first get credit counseling sessions for at least six months. A credit counselor will evaluate the person’s personal finances and debts to see if they in fact should file for bankruptcy.
The government took this action because it can deter people from filing for bankruptcy and because it helps to educate consumers on financial matters. People can only file for bankruptcy once every seven to ten years. This means that this is their only chance to get a fresh start financially. Credit counseling sessions help these individuals learn about how to address credit card debt problems and how to budget their monthly personal finances.
There are often other solutions that can help people survive with credit card debt problems instead of filing for bankruptcy. They are debt consolidation loans and debt settlements. Both involve finding ways to pay off debts quickly. In a debt consolidation loan, a person borrows enough money to pay off their debts. They repay the loan every month which saves them a lot of money in interest.
Debt settlements involve contacting creditors to negotiate the balance owed and pay them off in a matter of weeks. Consumers can often settle their debts and save between twenty and forty percent on the balances owed.
Credit card companies are now marketing to people more aggressively now because they know that the reforms that have been implemented work in their favor. If it is harder to file for bankruptcy and a waiting period of at least six months then people are more likely to be forced to pay their debts.
Credit card companies basically have more of a safety net now so they are marketing aggressively to consumers so that they have more customers which mean more revenues for them from late, missed payment, and interest fees. They are targeting people even with bad credit with promises of great interest rates and no fees. In reality, these people are charged costly membership fees and have very low credit lines.
About the author: Fay Tadlas is a writer for PayingPaul.com, a website dedicated to helping people pay off credit card debt without a loan or filing bankruptcy.