Debt Settlement Explained

Every day I speak to people who, 2 months ago, were doing just fine with their credit card payments and suddenly they can’t afford them. With the New Credit Card Accountability, Responsibility, and Disclosure Act (The Credit CARD Act) coming in to action in February, the credit card companies are literally screwing the American Public. You see, President Obama signed into effect new regulations that these credit card companies are going to have to follow… but he gave them until February for adherance, and the credit card companies are taking full advantage.

Imagine if you were struggling with your minimum payments at 2% of the total balance, and suddenly you had to pay 5%! That’s what Chase recently did. I found this and other changes identified on ConsumerReports.org.

I personally don’t understand their logic. I have people call me who didn’t need debt settlement 2 or three months ago, and now the credit card companies are forcing it upon them… Relegating the consumer to miss payments, or pay what they can until they figure out that they are never going to catch up.

I work in this industry and still can’t do the math on this one. If a consumer owes $5,000 and the minimum payment was at 2% ($100) and it suddenly shoots up to $250 (5%) – Really? What the hell are they thinking? OK – so now I can’t afford my minimum payment, but I am an upstanding citizen who never wanted NOT to pay, so I pay what I can… the original $100 I was paying… and every time I do that I get a late fee… Not to mention the fact that my interest rate now shoots up to an ungodly 29%! Giving the credit card companies my $100 payment is like throwing money away because it only covers the $40 late fee and some of the interest. Nothing is even going to the actual principle and I will be in this credit card trap forever if I don’t take drastic measures…

How do you wrap your head around that?