Credit Card Debt Relief

It's hardly a surprise that consumer loan delinquencies are on the rise. What do banks and credit card companies expect consumers to pay with when job losses are at an all time high?

Still, today's numbers are striking: During the first quarter, the delinquency rate among eight types of closed-end installment loans rose to 3.23%, according to the American Bankers Association. This is the highest recorded increase since ABA started tracking the rate in the mid-1970s. In the fourth quarter of 2008 the rate was 3.22%.

And credit card delinquencies also moved higher, growing 4.75% in the first quarter from 4.52% in the fourth quarter last year. The percentage of all outstanding debt on credit cards hit a record high of 6.6%.

ABA defines delinquent payment as one that is more than 30 days past due.

The main culprit: a growing loss of jobs. The unemployment rate rose to 9.5% in June, with 467,000 jobs cut during the month.

While Bankruptcy remains an option for some, consumers need to be aware of the consequences. Research conducted by professors at Ohio State University and the University of Maine found that financial damage caused by filing for Chapter 11 can be widespread and last for decades.

Overall, it can take over 20 years for bankruptcy filers to reach the same financial status as those with similar social and economic backgrounds who did not file for bankruptcy. It took more than a decade for a bankruptcy filer to catch up to peers in terms of savings, income and home ownership, according to the study. It took more than a quarter of a century to reach the same level of net worth.

Jay Zagorsky, co-author of the study and a research assistant at Ohio State, notes that high prices for gas, food and housing, combined with crushing debt, can make bankruptcy seem like an easy way out with a clean slate.

"But," he adds, "to experience what people may heard of as a "fresh start," that may take longer than they expect or would like."

Debt Free Associates continues to offer consumers a legal and ethical way out of this mess. Brad Smith of Debt Free Associates said in a recent press release, "The lending landscape is going to be forever changed. Credit card companies and mortgage companies gave away loans to people that normally should not have ever qualified. I mean, have you ever had a credit card company ask you for a paystub to prove you can pay this money back?"

Debt Free Associates is Nationwide financial services company that provides debt settlement and debt management plans for people in severe financial duress. They can be reached at 877-HALT-DEBT for a free quote.

Whether it's because of illness, unemployment, or unexpected financial disasters, you might someday have to deal with a collection agency. This won't tell you how to avoid paying off your old debts; it will tell you how to deal with the phone calls in a way that you and the collection agency representative will both be satisfied.

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