Is recession a reason to stop paying your bills?

Like it or not, if you have a credit card and have spent on it, you are a debtor. You have to repay what you have spent and not paying attracts debt collectors calling you. The recession in the recent years or the sky rocketing cost of living are not reasons for not repaying debts. Typically, debt problems have not fallen from the far and wide sky but are a making of your own bad spending habits, unemployment and credit card theft.

Whatever your reasons for ending up in credit card debt are, you are entitled to a fair collection of debt under the Fair Debt Collection Practices Act (FDCPA) enforced by the Federal Trade Commission (FTC). You may consider the following options to eliminate debt.

The first option to consider when you are unable to pay debts is to talk to your creditors directly. A direct conversation is always appreciated. Seek debt reduction rates and negotiate to as low a rate as possible that would lead to lowered outstanding balance to be paid over a period of time. During such negotiations you may get a chance to set your own debt reduction rates.

Debt consolidation is another option when there are too many cards in question. In debt consolidation, all the cards are taken together, totaled and then a payment plan is deduced to mutual satisfaction of debtor and creditor. In the process, you will manage one single payment every month and the hassle of paying too many bills is no longer there. Debt settlement also is available which requires you to consult a debt settlement company that will negotiate with your creditor and reduce the total outstanding balance. You will be required to finish paying off the debt by the date set by the creditor.

Check if your debt has crossed the Statute of Limitations (SOL) which would mean you do not have to pay a penny. Any debt that has surpassed the “due date” need not be paid. In this case, the creditors have no rights to demand payments from the debtors and the same thing applies when those debt collectors demand payments from the debtors.

It is advisable not to pledge your retirement benefits though many Americans consider this option to come out of debts. Pledging your retirement money would reduce your account by a major share. Withdrawing retirement benefits prematurely also attracts penalty which would double your risk.

One good idea is to transfer your outstanding balances to zero interest rate credit cards. Such cards usually come during promotional offers and if you can grab such cards, you can pay interest free installments.

Whatever the method you choose to free yourself from the shackles of debts, do not get into any new debts. A lowered outstanding balance should not tempt you to get into more debts or a completely written off debt should not induce you to spend again on credit cards. The secret of financial peace comes from budgeting and spending wisely.