Debt

All About Credit Debt

The statistics vary depending on who you ask about the country's credit debt. Almost five years ago, the total credit debt was about $250 million short of $1 trillion and that the average credit debt held by every American household was less than $5,000. Since then, the figures constantly fluctuate, dictated in part by market forces and changing consumer attitudes about spending. But whatever the real figure may be the facts are that credit debt is real, that it can be disastrous for your present as well as future credit standing and that you may be more than knee deep in it along with millions of other Americans.

If you are, the best advice would be to avoid any knee-jerk reaction to your situation like seeking the advice of potential scam artists. In the age of plastic, people are bombarded in the media (TV, the Internet, the radio, flyers in your mail and grocery cart and even cold calls) with the promise that they can totally make your credit debt disappear; cleanse your records of still noted bankruptcies, bad loans; or even get you new and supposedly "legal" credit identity. If you read the fine print of the law or even ask a lawyer outright, the answer is a flat out no. This is a scam plain and simple. The familiar MO of these scam artists is this; they appeal to consumers such as you who not only have poor credit histories but with really bad credit debt as well. For a certain fee, they say they can clean your credit report, even remove notations of previously filed bankruptcies enabling you to get that new loan for a brand new SUV, an insurance, a new job and even a home mortgage. The truth is that alterations to your credit report without due process (like proving that certain items are incorrect or outright errors) is a federal offense.

The second best advice about dealing with a credit debt situation is really dealing it on your own. Take the opportunity not as a negative event to pummel your self-worth and self-esteem, but as a genuine chance to take positive control of your finances. It should be the time when you acknowledge mistakes, find the strategies to correct these mistakes and find the courage as well as help in moving on past these mistakes and never repeating them again. The first thing to do is assessing your credit card history; know where you stand financially. If you are confused on what to do, get a friend who knows about balancing and budgets to see if you can work out something on your own in terms of repaying your debts. Do not think of filing for Chapter 7 as a solution; this should be your last resort as a poor means of wiping out bad credit debt. A bankruptcy might worsen your credit standing because it stays on your credit history for at least 10 years and will be considered when your apply for new credit or loans.

The next best advice about knowing credit debt situation is that it should offer you the hope that bankruptcy is not the solution. If you feel that dealing it on your own is difficult, there are other options you might consider like credit counseling and debt consolidation which will put into place the repayment schemes for your debts that you might have trouble doing on your own.

Debt