personal Finance Story

Need to manage your debts? Easy, become a deadbeat. It seems to be picking up in popularity now a days. The awful and horrible recession that the US is in right now is the latest excuse du jour for people unwilling to be responsible for their actions. The S&P 500 is up over 9% since the lows set in March and the GDP posted a better than excepted 0.9% growth, but seriously it has to be a recession because everyday folks just can’t seem to make ends meet.

Case and point, I was watching the news the other day. That alone is a bit odd for me because I usually do not watch television. I get most of my news online. However, for whatever reason, I was compelled to watch that evening and I was lucky I did, because I caught a very interesting piece on debt consolidation/settlement in and around my neck of the woods.

The featured local resident was around $20,000 in debt. Instead of diligently paying off her bills, she turned to a debt settlement firm. She is paying them $3,000 for the privilege of them “negotiating” with her creditors to possibly reduce her debt burden by up to 60%. She may end up paying 40 cents on the dollar. Maybe. In her own words, and this is an approximate quote;

If I go bankrupt, they get nothing.

The trouble with standing your ground and saying shoot, is eventually, someone pulls the trigger.

Depending on the type of debt involved, the particular variation of bankruptcy available to debtors may be less than pleasant and all the while music to creditors ears. I am in no way an expert on bankruptcy laws but I have heard that Chapter 13 can be very brutal.

Bankruptcy laws aside, there should be outrage in the streets at individuals like this who flaunt their ability to walk away from their debts. It’s stealing. Period.

I’ve got a novel idea. Use the $3,000 debt settlement fee to, I don’t know, pay down your debt! $3,000 comes out to 15% of her total balance. That would be at least $60 off of her monthly minimum payment. She could use that extra $60 every month to start paying down her balance. Sure it would take a while, but I wonder how long it took her to rack up $20,000 in credit card debt?

Some people have no shame, and that costs everyone in the end. I doubt that VISA, MasterCard, and American Express run charities when it comes to their business. They are in the game to make money. When a bum wanders off with $20,000 of their money, they have to make up for it and then some. That price is paid by all the responsible credit card users like you and I. We pay it in the form of excessive fees, high interest rates, and merchant fees that increase the sticker price of everything we buy regardless of our method of payment. The extra cost is passed onto you even if you use cash for all of your purchases.

This entry was posted on Friday, May 30th, 2008 at 11:56 am and is filed under Debt. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.