Need Help For Credit Card Debt

Hey one of my friend has debt of credit cards and the amount is almost 4000$ with the interest .He has also lost his job. Now he is in critical situation. So what he should do to be out from this debt? Thanks in advance

First, above all, he shouldn't let the collection agents scare him. Credit card debt is unsecured debt. The worst that will happen is that he may be sued. When they win, a few years from now, all that will happen is that the judge will have his wages garnished to pay it off. In America you can't be thrown in jail simply because you can't pay your debts.

Since he is losing his job he needs to prioritize. Before the collectors get one cent he needs to make sure he has bought food, paid his utilities, and taken care of his rent or mortgage. Losing your home is worse than having a collection agent yell at you, which is all they can really do. Don't let him be scared into giving Visa his rent money.

If it has gone into collections, it is entirely possible to settle. Collection agencies buy debt for pennies on the dollar so most anything they get is profit. If he can scrape up a chunk of money, he should call them and make an offer. If they accept, make sure he gets it in writing and sends the payment by certified mail. Collection agents shouldn't have electronic access to your accounts because they are likely to take everything in them.

Finally though, this is money that he borrowed and promised to pay back. As a matter of honor, he needs to do so.

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Conan

"Without change there can be no improvment."
Zeek: The Art of Shen Ku

How exactly does a credit card work? I want to apply for a credit card that starts out with a minimum credit line of $300. If I get it, it will be my first credit card. If I get the $300 credit, I want to make a purchase for like $200. Is this a good thing or a bad thing to do? Can someone give me some good tips on handling a credit card without getting bad credit?
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Last edited by bonnieya on Sat Oct 10, 2009 5:23 am; edited 1 time in total

Hello Bonnie! $300 is normal for a starting line of credit. As for charging $200 on it immediately, no one here can tell you if that is a good idea or a bad idea, because we don't know your finances. If you aren't going to be able to pay that money back, it's a very bad idea. Especially when you start out it is important only to charge what you know you can pay back immediately, because when you first start out with a card you havn't figured out your spending habits (and which spending habits are bad).

Here are my quick and dirty rules for credit

The first and foremost, do not buy anything with credit you can't pay back. Credit isn't like money that falls from the sky, using a credit card is essentially promising the credit card company you will pay them the money back. And you should always hold to a promise, especially one concerning money.

Watch your spending habits. Credit makes people feel like they have more money then they do, and that feeling can quickly put you in a financial hole. A great tip I heard on this board is to put everything you want to charge on a list, and refuse to buy it immediately. At the end of the week look at what you wanted to buy and decide what you actually need now that you aren't in the heat of the moment. Remember though, credit isn't the enemy of being financially healthy, the bad spending habits are.

Always pay on time and pay more then the minimum balance whenever possible. Unless you are making a large purchase that you need to spread out over a few months you should be paying your card in full each month. Do not make a late payment, it makes your credit report cry.

Hope these help!

-Ronny

	bonnieya wrote:
	How exactly does a credit card work? I want to apply for a credit card that starts out with a minimum credit line of $300. If I get it, it will be my first credit card. If I get the $300 credit, I want to make a purchase for like $200. Is this a good thing or a bad thing to do? Can someone give me some good tips on handling a credit card without getting bad credit?

FOR GOD'S SAKE! DON'T DO IT!

I haven't had a credit card for years. Borrowing money is a bad idea to begin with and there is absolutely no good reason to have one. Get a debit card instead and don't buy things you can't afford.

_________________
"Crush your enemies, see them driven before you, and hear the lamentation of the women!"
Conan

"Without change there can be no improvment."
Zeek: The Art of Shen Ku

Listen to Conan Smile

Were I live CC is not that common. I was not aware of it before I was 26-27 years old. First then I knew there was a difference between debit (I used since I was 14) and credit. Now, I have one, but I have never used it for something I cant afford.

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Glad to have found this topic. I am now 21 and I'm quite conservative with my money. I've used nothing but my debit card and have stayed away from credit card like the plague because I have seen what it can do (my parents have never been good with money). I know technically it is possible to live without having a credit card, but can someone point out some practical situations where one would want to build up some credit (assuming the only way to do that is to use a credit card).

I have always been told that you need to build up credit for when you want to purchase a car or a house. How true is that really? If one does use credit to purchase things like that instead of cash, for how long should one build up his/her credit before making that purchase? Thanks in advance for any insight into the matter. Smile

This is true - I had a work colleague who was very careful and never had a card, and when he applied for a mortgage they wouldn't give him one as they said he had no credit record!

It's useful to use a CC for online purchases, and as long as you only buy what you can afford to pay off each month, you will get a good credit recod with no problems.

Some banks will manually rate a mortgage. If you have bad credit due to no credit history they can look at your employment history, your income, savings, and whatever payment history you do have such as power and phone bills. In this case it is helpful if you can give them a large downpayment. And only a few banks will do this. But banks make money through loans so, in theory, they should be eager to work with you.

Having said all that, my credit was actually really good when I got my mortgage. I had just recently paid off my student loans and, although I rarely used it, had had a credit card for a while. It was all recent enough to show up on my report so I didn't have a problem. I haven't borrowed a penny since though.

There is absolutely no good reason to borrow money for a car. Buying a new car is just a bad idea anyway. It loses half of its value in two years and costs more to insure. Meanwhile you can get a very good used car for around $5000. My last one lasted 8 years. You are much better off to save your money and pay cash for it. Figure in interest and taking out a loan doubles the amount you will pay for it.

If you are going to try to build up a credit score, my understanding is that reports show all activity within the past six months. If you want to play the game, buying a few small things on credit and taking three or four months to pay them off entirely should give you a fairly decent score. Fuel up your car or buy groceries. They're things you would have bought anyway.

_________________
"Crush your enemies, see them driven before you, and hear the lamentation of the women!"
Conan

"Without change there can be no improvment."
Zeek: The Art of Shen Ku