The debt statistics in the United States are frightening. Most Americans are aware of their own problems, but not how deeply in debt the whole country is right now. Many don't know that the average citizen with a credit file is some $16,000 in unsecured debt. That doesn't count mortgages, car loans or debts that have collateral attached to them. Knowing this number alone, it becomes easier to understand why consumers are seeking debt help and why banks are receiving record numbers of requests for debt consolidation loans.
It is hard for the individual to even relate to the Federal Reserve's figures that put consumer debt in the trillions of dollars. Any amount that can't be paid each month is overwhelming enough to the average person. In reality, consumer try hard to keep their credit debt in check. Statistics show that only 8.3% carry more than $9,000 on credit cards, but whether the consumer owes that much or much less, if payments are late or can't be made, they need and seek help with credit card debt.
Responsibility for the debt after the card holder's death can also come into play if you have a financial relationship with the deceased- for example, you are actually listed on the card account as a co-signer. Finally, in the event that the deceased has assets, they will be placed in the estate until everything is settled. The credit card companies have the option to make claims upon that estate in order to be compensated for the credit card debt.
Because most people have not dealt with such severe debt before, the two most common solutions that come to an uninformed mind are bankruptcy or getting a debt consolidation loan to pay off balances with. The problem with either solution is that each brings new and even more serious issues along with its remedy. Going to a bank and arranging a consolidation loan is not that hard if the consumer has plenty of equity in a house or owns other property outright. They will get their loan but don't stop to realize that they may be getting themselves far deeper in debt and creating more financial problems than they ever imagined. First of all, a debt consolidation loan does not reduce debt, and two, the consumer has just turned unsecured debt - from credit cards - into secured debt. All too many don't understand this until they miss payments, and receive a foreclosure notice in the mail.
A secured loan is all about what the borrower promises to give the lender as proof that the debt will be repaid. It may seem reasonable today to put up a house against such a loan, but the unforeseen can happen. Job loss, major illness, divorce or any other number of things can effect future income, and thus the payments. Credit card debt is unsecured. There is no hard asset promised if there is a default on the loan, and there's absolutely no reason to trade one for another in hopes of getting debt relief. Especially when there are other forms of debt help like debt settlement or debt management that both work without a loan and work to actually reduce the total amount of debt owed.
It is hard for the individual to even relate to the Federal Reserve's figures that put consumer debt in the trillions of dollars. Any amount that can't be paid each month is overwhelming enough to the average person. In reality, consumer try hard to keep their credit debt in check. Statistics show that only 8.3% carry more than $9,000 on credit cards, but whether the consumer owes that much or much less, if payments are late or can't be made, they need and seek help with credit card debt.
Responsibility for the debt after the card holder's death can also come into play if you have a financial relationship with the deceased- for example, you are actually listed on the card account as a co-signer. Finally, in the event that the deceased has assets, they will be placed in the estate until everything is settled. The credit card companies have the option to make claims upon that estate in order to be compensated for the credit card debt.
Because most people have not dealt with such severe debt before, the two most common solutions that come to an uninformed mind are bankruptcy or getting a debt consolidation loan to pay off balances with. The problem with either solution is that each brings new and even more serious issues along with its remedy. Going to a bank and arranging a consolidation loan is not that hard if the consumer has plenty of equity in a house or owns other property outright. They will get their loan but don't stop to realize that they may be getting themselves far deeper in debt and creating more financial problems than they ever imagined. First of all, a debt consolidation loan does not reduce debt, and two, the consumer has just turned unsecured debt - from credit cards - into secured debt. All too many don't understand this until they miss payments, and receive a foreclosure notice in the mail.
A secured loan is all about what the borrower promises to give the lender as proof that the debt will be repaid. It may seem reasonable today to put up a house against such a loan, but the unforeseen can happen. Job loss, major illness, divorce or any other number of things can effect future income, and thus the payments. Credit card debt is unsecured. There is no hard asset promised if there is a default on the loan, and there's absolutely no reason to trade one for another in hopes of getting debt relief. Especially when there are other forms of debt help like debt settlement or debt management that both work without a loan and work to actually reduce the total amount of debt owed.
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