It’s no secret that people have a lot of trouble paying down their credit cards. Take me for example. I got a credit card in my early twenties (I won’t say which one, but it starts with an ‘A’, and ends with a ‘merican Express’.) That zero percent interest rate sounded great, and for the first few months everything was just fine. I made my payments on time, and was on my way to establishing good credit. Then, I somehow missed a payment. Perhaps my finances were tight that month, or I just misplaced the bill. The reason didn’t matter to my credit card company though. They started charging me thirty (that’s 30) percent interest and soon, what had been a measly $500.00 debt was over $3600.00.
Now, I’ll accept the blame for missing the payment, and when I went back and checked the contract, sure enough, miss a payment and get the interest rate jacked up. As a young man who was still trying to find his way in life, I tried to make the minimum payments, but I soon found that by making those minimum payments I would never actually pay down the debt to zero, or at least I wouldn’t before I was fifty years old.
About this time I started practicing as a bankruptcy attorney, and I discovered something. I was not the only one in this sort of situation. All my clients were too! All across the spectrum, from police officers to construction workers to office managers to salespeople, everyone was being crushed by the interest rates on their credit cards. I was one of the lucky ones with only one card to worry about, but imagine that same problem with three, four or five credit cards, all with thirty percent interest! It’s outrageous! And then, there were the people who thought at the very least they could reduce the number of credit cards and make their debt more manageable. They paid off one card with another, and their installments were still too high to make more than the minimum monthly payment.
The madness has to end sometime though. People are smart, and we will all eventually realize when we’re in over our heads. That’s when it’s time to seek help. And please, whatever you do, don’t seek help from a ‘Debt Consolidation Agency.’ First of all, there is nothing anywhere that says that all your creditors have to go along with the repayment plan. They can opt out, and still be waiting for you in the end, with all the interest that you’ve accrued. Second, Debt Consolidation Agencies can take up to Forty percent of what you pay them every month as service and administrative fees. That means that for every $100.00 you pay them, only $60 is actually going to pay back your debt. Not a good deal at all.
So, talk to a professional. If your debt is more than you can manage, perhaps it’s time to give yourself a fresh start, or at least work out a repayment plan with the full power of the law behind it. Contact an specialized attorney and find out if bankruptcy is right for you.
Until then, keep your eyes on the prize.