Remember the story about the poor
farmer who broke into his doctor's office to steal medication for his dying daughter because he couldn't afford the medication? The debate around this had to do with ethics: Is it okay to steal to save the daughter's life? Is it right for the drug companies to charge extremely high prices for a prescription? Should the farmer be imprisoned? Is he justified in stealing?
The same story exists today between credit card companies and us - consumers. Shouldn't it be illegal for the credit card companies to charge us 18%, 20%, even 30%? How are we supposed to get out of debt if all we are able to pay is minimum payments each month? If you're a 700+ credit score and you think you have a low rate,you should check your statement the next time it comes in the mail. Your credit card company can raise your interest rate on a whim; and if you don't believe me read the fine print. As consumers we are expected to be in debt our entire lives. Visa spent $600 million last year in advertising so that you can still be in debt. There's a reason why most of us out there can only pay minimum payments on our credit cards each month. And it's not because we're irresponsible consumers (though that does play a small part), but there is a grand design that has been schemed to keep us not only in debt, but in debt our entire life span.
Everyone of us desires more disposable income. We all definitely want more free time to play with our kids and hang out with the family. The fact of the matter is - this isn't going to happen in the near future. The perfect storm is brewing in our economy right now: Baby-boomers are starting to retire, social security will dry up, bailouts are handed out left and right, mortgage crisis hasn't hit rock bottom, interest rates has increased; this is definitely another article in itself but ascredit card rates rise and the perfect storm comes over us - realize that we will be paying back our bills/interest until the day we die.
So how do we get off this nightmare of a merry-go-round?
What will happen if I just stop paying my credit cards and tear them up?
First of all know that there is no such thing as credit card jail. However there are repercussions:
Collection and Creditor Calls: You are going to be harassed day and night with calls up to 5, even 10 times a day. Your relatives, friends, and workplace could be contacted to find out where you are. It won't be pleasant but you do have rights and they are protected by the FTC (Federal Trade Commission). For more information look up the Fair DebtCollection Practices Act.
Credit Score: You credit score will be affected. Late payments will be reflected on your credit report. If you let it go for sometime, collections and charge-offs will appear on your credit report. These can be removed once debt is paid or settled.
Legal Action: Depending on what state you are in, you could be garnished. You could have an aggressive creditor that takes you to court and imposes liens and/or judgments. Though the latter can happen, most creditors will sell your debt to a third partycollection company simply because it's economical for them to do so rather than seek litigation.
Side Note: If you have a moment, watch (and simply type this into a search engine and you'll find more than a dozen links) the PBS Special: "The Secret History of theCredit Card". You'll be floored by not only how we got hooked on credit, but the methods used by credit card companies to earn enormous profits..
Though the repercussions are scary, the good news is that there are legitimate companies out there working with your best interest at heart and who can not only handle these for you, but legally wipe your debt clean and have you free of your creditors. If you find yourself saying "I cannot paymy credit cards", consider creating a debt elimination plan or contacting a debt elimination services company. Just like in anything else though, do your research and talk to several firms before enrolling in any program.
Looking for debt relief? Check out Curadebt.
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