ACCORDING to a recent newspaper article, a lot of consumers are falling behind on their credit cards at an alarming rate. This conclusion comes from analysis of financial data obtained from the country’s largest credit card issuers. The greatest increase, according to the study, is among accounts that are 90 days late. If you have ever been 90 days late on paying your bills, you know that by this time, your accounts are usually turned over to a collection agency. This is when bill collectors start harassing you and you don’t even want to answer your phone anymore.
Experts agree that this growing problem is partly a result of the mortgage crisis and is only expected to get worse in the days ahead. Obviously, when homeowners can barely afford to even make their mortgage payments, other debts such as credit cards simply have to wait to get paid. What’s making this situation worse is that a lot of people in foreclosure are also tapping into their credit cards in desperation just so they can make their mortgage payments. Some of the biggest lenders like Advanta, GE Money Bank and HSBC are reporting increases of 50% or more on delinquent accounts compared with the same period a year ago. Economists are predicting that delinquencies and defaults will rise further as the foreclosure crisis worsens.
Just a few years ago, a lot of debt-ridden homeowners were at least able to tap into their home equity (as a last resort to avoid bankruptcy) and use the cash to pay debts. But with the current real estate market condition where property values in some areas are down as much as 50% from just a few years back, these same homeowners are finding it impossible to refinance their mortgage or obtain an equity line of credit. Because banks are no longer willing to loan money like they used to, homeowners are now whipping out their credit cards for quick cash. Credit cards can be useful in financial emergencies provided that you can pay it all back. But borrowing more than you can repay is committing financial suicide and will only lead you to bankruptcy.
Important Update: Lately, a lot of homeowners facing foreclosure have also told me that they tried working out a loan modification with their lender but were told that due to their high debt-income ratio (as a result of having too much credit card debt), they simply do not qualify for a loan modification. What this means is that if you have too much debt that you cannot repay, chances are that you can’t afford to keep your house either and it is probably pointless to even modify your loan if you will end up in foreclosure anyway. Thus, it only makes sense to find a way to either lower or eliminate your other debts in order to improve your chances of getting a loan modification with your lender.
If you are facing serious debt problems, the time to seek help is now, not later because the longer you wait, more often than not, the more you limit the options that may be available to you. If you are one of the thousands of homeowners in this country who are dealing with a foreclosure, remember that time is of the essence and important legal and property rights may be at stake. Seek counsel immediately from an experienced and knowledgeable bankruptcy attorney who can advise you regarding possible legal options.
For a free consultation, please call our office at Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos and West Covina.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped more than 4,000 clients in finding solutions to their debt problems. To schedule a free attorney consultation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772).
( Published on March 11, 2009 in Asian Journal Los Angeles p. B3 )
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