I hate to tell you, but Credit
is a scam! I've read so many articles and read numerous reports on the bashing of debt settlement and how unethical it is that it makes me sick to my stomach. It's no wonder why consumers are so deep in debt - credit counseling advocates are bashing debt settlement, debt settlement companies are retaliating by bashing credit counseling, both are bashing bankruptcy, and bankruptcy is bashing everyone else - there is zero direction. The only people with direction in this country are the rich and the poor. The rich can afford to have financial advisers, and if you're making less than $15,000 a year, those same financial advisers are doing pro-bono work for this group.
That leaves all of us - the middle class. And who do we turn to for advice? Well for one we can't afford financial advisers. Two - we're too embarrassed to ask our family. Who does that leave? Friends and co-workers. The problem is these friends and co-workers are in the same boat you are! Ever heard the expression 'Keeping up with the Jones'? That's what everybody is trying to do - except little do they know that next week the Jones' are filing bankruptcy.
There is no absolutely no direction for the middle class and it's sad. When people are in trouble financially, without hesitation they think of credit counseling. If you were to visit several government sites, you'll even see a list for 'Approved' credit counselors. Did you know that credit counseling was first formally organized in the 1950's as the National Association for Credit Counseling (NFCC) with the purpose of which was to help creditors recover delinquent debts and prevent the loss of revenue brought on by bankruptcy?
Please don't miss this point! - this program was designed by those engaged in the collection industry for the sole purpose of benefiting lenders. As lenders made credit easier to obtain, personal debt began to rise. This rise in debt resulted in more and more people getting in over their heads and ending up in bankruptcy court. The credit counseling industry was formed with the intent to maximize revenues for the lenders.
So now I ask you, which program is more ethical? A credit counseling program designed by the creditors that got you in the mess in the first place? Or a debt settlement program in which you pay half of what you owe back? But is it really half that you're paying back? Go to any financial calculator on any financial website and find out what the true cost of credit actually is. Over the years you'll be shocked what you have paid your creditors in interest alone.
If you purchase a $250,000 home on a 30yr Fixed mortgage at a decent rate, in 30 years you'll end up paying over $750,000 for that home. The first 7-10 years of any loan goes straight to interest. Do you know how many years the average American stays in their home? You got it - 5-7 years. The financial institutions figured this out a long time ago. They've recently figured out as well the "student trap" whereas if credit is given to college students, they can reel them in at a young age and keep them in debt just about their entire lives. Let's take it even further. Grade schools have a program called Jump-Start. Guess who designed this? You're catching on - creditors.
So let me ask you again - is credit counseling ethical?
Again, credit counseling is a scam! Here's the secret to get out of debt: Stop going further in debt. Operate on a cash basis (meaning even if you charge an item on your credit card, pay it off that month). And finally you have got to get out of debt as fast as you can for the least amount you have to pay. What's the fastest ways to get out of debt? (a) A chapter 7 bankruptcy. (b) Then debt settlement or debt negotiation. (c) And finally a fixed payment plan. Is a credit counseling a fixed payment plan? Not even close. You might wonder then if it's such a scam then why does it pop into people's minds automatically and why would our government endorse it if it's so wrong? If I really need to answer the latter, then I have nothing more to say.
As far as why it pops in people's minds - it's simply because the program's been pounded into our society for generations. We don't know any better. And why would we? The same creditors who tease us with 0% rates and raise them to 30%, are the same group who will counsel us to pay back every single penny plus interest plus fees (which can take 5-7 years). And with no education or tools other than a budget, they know that human nature will get us back into debt trouble again, and it all starts over again. Did you know that 75% of clients in a credit counseling program drop out? The reason for this is because they were smart enough to realize that they can do a budget themselves.
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