Debt Management

Many people had the habit of making the most of their credit cards and then declaring bankruptcy. Your credit card debt would be eliminated in bankruptcy court and would receive a “fresh start.” In March 2005 the U.S. Congress drastically changed the bankruptcy code, limiting access by individuals to Chapter 7 of the code, which was the section of law that severely limits the repayment of debt. The credit card companies now check your credit report frequently, sometimes every month. Even if you never fall behind in their payments to them, they may decide it is not a first client and may be accelerating. Some of the things that banks are seeing is the use of their overall debt? If your relationship is very high it’s scary. Another event that may trigger a rate increase is a late payment to another credit card company or even the telephone or electric company.

Being even one day late with a payment to any creditor can lead to a fourfold increase in the rate of interest. If you are using one of the interest free or low offers banks use to lure you to them, it is likely that their rate of increase as high as 29%. Thus, a final note on credit cards: do not ignore the little messages you send to the banks, either in your statement or separately. They may contain nasty surprises, as an increase in interest rates can be avoided by simply writing the credit card company and no longer using their card. I personally I have one of those love notes, trying to raise the interest rate of around 14% to almost 24%. Needless to say that card was in the trash.

Now more than ever, must learn to use credit in a responsible manner. The rapid escape of bankruptcy will be harder to get and very expensive in the long run to ruin your credit at any point in their lives. A bad credit score not only affects interest will pay in credit cards, personal loans and mortgages, but can also affect your ability to get a job, rent an apartment or resulted in an increase in their auto insurance premiums . So small pieces of plastic seriously and handle wisely.

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