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WARNING SIGNS FOR DEBT-AHOLICS
FOR IMMEDIATE RELEASE!
Valencia, CA, October 30, 2001-"Consumers place themselves in danger of bankruptcy when they fail to note the warning signs of debt," states Kevin Bonn, a Vice-President of The Debt Solution, Inc., a California-based company that specializes in providing debtors with bankruptcy alternatives. "They wake up one morning to find the wolf at the door."
Several current trends have conspired to create record bankruptcy filings. The second quarter recorded the country's highest-ever filings and put 2001 on a pace to exceed 1998's record of 1,442,549 filings. Americans are carrying record levels of debt in relation to disposable income according to the Federal Reserve, plus the economy is fragile and many consumers fail to realize the danger they are in.
"When you ask someone how they got into so much debt," relates Bonn, "'I don't know,' is the most common explanation you hear and I believe that's the literal truth."
A typical scenario involves building up debt on credit cards to a point where the debtor can barely sustain their minimum monthly payments. This renders them completely vulnerable to factors that commonly precipitate bankruptcy: divorce, loss of work or income, death in the family or legal problems.
To alert consumers to impending debt overload a list of warning signs was compiled in co-operation with financial professionals. The warning signs address three stages of debt; the BEGINNING, ACCUMULATION and ultimate DANGER phases.
Some say obtaining a credit card, as opposed to a debit card, is a consumer's first mistake in the BEGINNING phase of debt. However, most agree that one early warning sign is when a consumer fails to pay off their monthly balance. It is estimated only about 40% of U.S. consumers pay their credit card bills in full each month.
The most common reasons for this are failure to track expenditures throughout the month or having no reserve for emergencies. "'I'll catch up next month,' is the most common rationalization you hear," states Tim Crofts, a financial advisor with Benchmark Innovative Solutions, Inc.
One of the strongest signals of the debt ACCUMULATION phase is when consumers immediately spend any increase in their credit limit. People used to operate on a cash basis, but credit cards are a "painless" way to spend that encourages people to pursue a lifestyle that is in reality beyond their means.
"When someone is notified of an increase and reacts by thinking, 'Hey, I've got $500 more to spend!' it's a sure indication they are headed down the wrong road," states Les Whitworth, a Los Angeles-based CPA.
One sure sign a consumer has entered the DANGER stage of debt is when they struggle to make minimum monthly payments. Cash gets so scarce they may have to charge living expenses (groceries, rent, etc.) or using cash advances from one credit card to pay on another. Sooner or later a payment is missed and the house of cards begins to tumble.
"Consumers often fail to realize the snowball effect when they miss payments," Bonn notes. "They have to make up missed payments plus added late fees to get current and their interest rates can escalate as high as 29%. The chances of financial survival go downhill rapidly."
The most common options for getting out of debt include debt counseling and debt mediation. Debt counseling is a known procedure that applies mainly to the BEGINNING and ACCUMULATION stages of debt. By the time a consumer reaches the DANGER phase and can no longer sustain minimum monthly payments, their options are usually limited either to debt mediation or bankruptcy.
In debt mediation, a consumer works with a mediator to negotiate lump sum settlements for each creditor; for instance, a $4,000 settlement on a $10,000 debt. Those who have successfully used mediation retain control of their finances, eliminate debt in 24-36 months and substantially improve their credit standing. In bankruptcy, debtors may eliminate debt, but they lose financial control and have ruined credit for at least ten years.
About The Debt Solution:
The Debt Solution, Inc., headquartered in Valencia, California, provides debt mediation services to qualifying consumers throughout the United States and Canada as a viable alternative to bankruptcy.
The program offered by The Debt Solution differs from traditional debt counseling or debt consolidation. As these do not address the amount of outstanding indebtedness, they are not designed to help individuals who cannot sustain their minimum monthly payments. The program, while voluntary, is closely supervised. It greatly reduces the stress of creditor calls and produces a consumer who is totally debt-free within 24-36 months.
The Debt Solution offers additional services that educate the debt-free graduates to manage their incomes wisely, attain financial responsibility and live prosperous lives of wealth accumulation.
For more information on the Debt Solution call (866) 863 - 5544 or visit www.TheDebtSolution.com.
Sign Up Today!
If you are interested in getting out of debt, saving thousands in interest, and having your debts settled for pennies on the dollar, sign up today for our free personalized debt settlement consultation, with one of our certified debt consultants.
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