Mike Campbell has spent more than fifteen years helping ordinary American heads of household navigate the inner workings of consumer finance and successfully forge their own debt relief solutions. If you have any questions regarding credit card debt, Chapter 7 or Chapter 13 bankruptcy protection, equity consolidation, settlement negotiation, or any other topics related to secured and unsecured financial obligations please send them along to naked_and_the_debt@totaldebtrelief.net for a possible response.
Frustrated In Frezno
“Me and my husband have been trying to pay down the credit card debt for a while now, but, every time that it seems like we are making some head way, turns out one of the kids needs braces or the water heater breaks down and we’re back to square one. We’re really serious about the debt relief plans, but it can just get so frustrating to start up again after we lose momentum. Last week, one of my husband’s friends came over for dinner – he started up the conversation and all, it’s not like we talk about this stuff with just anyone – and I guess he had just gone through Consumer Credit Counseling and paid off loads of credit card debt.
“Now, he did not recommend Consumer Credit Counseling in any way, I guess the company ruined his credit and charged way too much and he could barely get them on the phone after the first couple weeks. But, they did have a couple of interesting points that got us thinking. One of the reasons we kept butting heads against the wall was because the very worst credit card debt accounts were also the largest (big surprise, huh?) and it felt like we were never getting anywhere. The Consumer Credit Counseling folks told my husband’s friend that, in some cases, it actually makes more sense to start up on the smallest credit card debt balances just to get the ball rolling. Is this a real debt relief strategy? Does it actually work?”
Frustrated in Fresno
Funny you should mention getting the ball rolling. This is an honest to goodness debt relief strategy called snowballing, and it has been proven successful for countless borrowers, even if the heads of the family budget didn’t precisely realize what they were doing at the time. In the best of all possible worlds, you would want to focus all energies and moneys upon whichever loan boasts the highest Annual Percentage Rate. As a matter of fact, your run of the mill expert in fiscal domesticity might dismiss the snowball plan outright as nonsensical by definition, but economists by and large come to their chosen profession because of a singular affection for the supremacy of theories.
Real people with real problems, trying as best they can to keep heads above water and beat back depression, will not always act in their own best interests. The likelihood that desperate bread winners could be consumed by the sheer size of credit card debt sums and abandon their struggle must be weighed against the costs of financing expended (rarely meaningful) by first paying down the smallest sums to demonstrate that debt relief could be ratified. There is still one caveat, though. The snowball method would not be the most effective debt relief tool (and could indeed prove catastrophic) if one of the credit card debt accounts or other loans that you’d been working on had imminent penalties: a financial charge for not restructuring a balloon payment or an Annual Percentage Rate soon to turn adjustable and rise up point by point. Before making any final decisions about a debt relief tactic, study all of the eventualities and, whenever relevant, consult with a professional about your debt relief concerns.
Bullied in Bellingham
“I’ve been trying to move out of my apartment and find a decent home for more than a year, but my work history has had a few interruptions and mortgage companies keep giving me the run around. Last month, I found a sweetheart deal that would be absolutely perfect – on the waterfront, way bigger than anything I expected in my price range, and the only catch is the seller needs the house to move now! Literally, he’s only interested if I could close in the next month. Just when it looks like everything’s gonna work, this credit card debt for six hundred bucks shows up on my credit report out of the blue. It’s a Mastercard bill from 2007, and, not only have I never ever had a Mastercard, I was out of the country entirely during that year. This is NOT my bill! It just doesn’t seem to matter, though. My mortgage broker says he can’t do anything as long as it’s on the credit report. I’ve spent so much time working on debt relief just so I would be able to get a place, and I’d pretty much had everything cleaned off. Hate to pay off somebody else’s bill, but do I have a choice?”
Bullied in Bellingham
Your loan officer’s going to have the final say on the matter, but, from what you’ve said, it sounds like you might just have to bite the bullet and pay off the credit card debt in order to get the home loan approved. Odds are the debt was taken out by some one with a similar name or similar social security number, and someone working for one of the credit reporting agency made a mistake. If you’re absolutely positive that you have nothing to do with the credit card debt – you didn’t co sign on the loan; it wasn’t purchased by another lender – the only question’s how quickly you need the matter resolved.
In the old days, before federal legislation imposed strict penalties for credit bureaus that ignored consumer complaints, you would’ve had to hire an attorney specializing in debt relief and credit repair to force the issue, and that would’ve cost about as much money as the credit card debt itself. Nowadays, the credit bureaus will be forced to change the report if the lender doesn’t provide documented evidence of the defaulted loan in under thirty days, but that might not work on your time table. You might try contacting a settlement negotiation counselor with a reputation for speedy debt relief arrangements and have them talk to the lender to see if you could get the bad mark removed for only a few hundred dollars.
Had you been checking up on your credit reports all along? You can get copies of all three bureaus’ histories for free once a year, and this is a prime example of just why every borrower should pay attention to the bureaus’ reports, regardless how sure they might be that they’ve kept their nose clean and eliminated all of the problem credit card debt accounts. Sounds like the debt’s old enough that it’s not a sign of attempted identity theft, but this could have been far worse.
