Part 1: The Pressure to Maintain Credit Card Debt

What you are about to read may challenge conventional beliefs about debt, and you might not have encountered these ideas before. If you find yourself overwhelmed by credit card debt, there’s a way to stop the financial drain and regain your sense of freedom and tranquility.

This method is free, valid, and effective! I can affirm this through my own experiences and those of others who have successfully navigated this path. However, due to the significant influence of the banking sector and societal expectations, few dare to discuss this possibility: simply walking away from debt.

This approach may not suit everyone. It specifically applies to credit card debt; student loans, taxes, home mortgages, auto loans, and other secured debts are not included. Your financial circumstances will ultimately determine your ability to adopt this strategy.

Criteria for Consideration: - You need to be creditor-proof, meaning you have no valuable assets that can be seized and your wages cannot be garnished. If you are current on your mortgage and car loans or own your home outright, you are generally safe. - You must not be concerned about your credit score, which is likely already low if you are struggling with debt. Rest assured, you can rebuild it later. - You should prioritize the well-being of yourself and your family over the profits of large corporations. - You must be willing to defy societal pressures and take proactive steps to protect yourself, remaining committed to this decision.

Who Claims You Must Pay Off Your Credit Card Debt? It seems like everyone does. However, this assertion is misleading. Not repaying credit card debt is not a criminal offense. You can indeed choose to walk away from such debt, potentially freeing yourself from the overwhelming stress it causes. I will explain the reasoning and methods behind this, leaving the final decision in your hands.

If you’re deeply entrenched in credit card debt and feeling anxious about bills you may never be able to settle, it’s crucial to understand the legal framework and the dynamics that keep you in this situation. Currently, you might be operating under the misconception that you must repay these debts.

Have you ever questioned the validity of this belief? Understanding the law and your rights is essential. I want to clarify that I am not advocating fraud. Most people intend to manage their credit responsibly, similar to how newlyweds typically don’t plan for divorce—but life can lead to unexpected outcomes.

So here you are, facing a mountain of credit card debt. If you only make minimum payments, it may take a lifetime to pay it off, affecting both your health and your quality of life.

To grasp the cost of making only minimum payments, consider using a tool like Forbes’ Credit Card Minimum Payment Calculator.

Depending on your specific situation, walking away from credit card debt might be a feasible option without resorting to bankruptcy, which could incur additional costs you’re not prepared to cover.

This topic is critical for anyone burdened by heavy credit card debt, so I will split it into two articles: 1. The pressure to keep you in credit card debt. 2. A strategy for walking away from credit card debt.

I encourage you to follow me or subscribe to receive the next article, where I will outline actionable steps for your consideration. (See below for a link to “How To Walk Away From Credit Card Debt”)

Disclaimer: This information is for informational and entertainment purposes only. The insights shared are based on the author's personal and professional experiences. Readers are encouraged to conduct their own research and are solely responsible for their actions.

Who Wants to Keep You in Debt?

Credit Card Companies and Banks Naturally, credit card companies and their issuing banks benefit from your debt. That’s how they generate profits and dividends for their shareholders. Ironically, if you hold mutual funds through a 401(k) or IRA, you may own a small stake in these financial institutions. They prefer you remain unaware of your rights. Their exorbitant interest rates, often between 15% and 28% or higher, yield substantial profits. They do not want you to pay off your debt; they want you to pay interest indefinitely.

Those who pay off their balances monthly are often labeled “deadbeats” because their prudent financial behavior does not yield significant profits for the banks. Yet, banks still earn transaction fees of 1.5% to 3% each time a card is used.

While credit cards offer convenience and immediate access to funds for discretionary spending, with a typical 28-day grace period for repayment without interest, it’s evident that companies like Visa and MasterCard rely on a portion of their customers to carry balances and incur interest and fees. They also factor in a certain percentage of uncollectible debts, or “write-offs.”

Credit card companies distribute their cards widely to nearly all individuals over 18, often with fine print that lacks proper explanation of the terms and conditions. The credit limits, interest rates, and penalties vary based on your creditworthiness, which is assessed through a system called the FICO Score, monitored by three major agencies in the U.S.: Experian, TransUnion, and Equifax. Learn more about FICO Scores here.

Your credit score is vital if you wish to secure a mortgage, car loan, or other forms of credit, and it can also affect your ability to rent a home. Negative information can linger on your report for six to seven years. However, this is not insurmountable; you can manage without credit, and your score can improve through strategic actions that I will cover in the next article.

Statistics regarding U.S. credit card debt can seem abstract, from an average household debt of $5,315 to a total credit card debt nearing a trillion dollars. A study by GoBankingRates suggests that around 14 million (6%) Americans have over $10,000 in credit card debt. But what if your debt exceeds that? If you feel overwhelmed by $10,000, you might be a candidate for a repayment plan. However, if your debt is $20,000, $40,000, $60,000, $80,000, or even more, depending on your financial circumstances, it may be wiser to consider walking away from credit card debt.

Collection Agencies Another entity invested in keeping you in debt is the collection agency. According to Experian, “A collection agency is a company that lenders and creditors use to recover funds that are in default or overdue.” The debt collection industry thrives on intimidation, aiming to frighten or pressure you into payment.

Creditors typically attempt to collect unpaid debts themselves for 60 to 180 days before selling the debt to collection agencies, often at a fraction of its original value.

Imagine you owe $100,000 in credit card debt, and the bank offers to settle for $5,000. You’d likely find a way to pay that amount, right? So why doesn’t the bank offer you this same deal? The system is designed differently. Instead, the collection agency purchases your debt and then takes on the responsibility of trying to collect it.

Once the debt is sold, it gets written off as a loss in the bank’s financial statements, and the bank moves on, often without further consideration for you as an individual. We often become mere numbers in a system—what matters most is your own self-worth and well-being.

Experian also notes that “Hearing from a debt collector can be unsettling, but may not be entirely unexpected. How you respond will depend on your circumstances. Knowing your rights and developing a strategy can help you mitigate damage to your credit and reduce stress during this process.”

Important Reminder: Debt Collection Agencies Have No Legal Power! Debt collectors have no authority beyond what you allow them. You possess legal rights, so it’s crucial to educate yourself about these rights regarding debt collection. The Federal Trade Commission offers valuable information on this subject (https://www.consumer.ftc.gov/blog/2013/08/facing-debt-collection-know-your-rights). Be sure to read the comments on that page!

The fear of “credit damage” is unfounded. If you’re already in default, your credit has already been affected. Carrying a high balance or maxing out your credit card will also lower your credit score.

Harassment by Collectors is Common, but Avoidable It’s crucial to recognize that after the credit card company gives up on collecting their money—regardless of how much you’ve already paid in interest and fees—they sell the debt and classify it as a loss. At that point, collection agencies can only resort to harassment. While you can protect yourself from their intimidation tactics, understanding your rights is essential. We will delve into this further in the upcoming article, “How To Walk Away From Credit Card Debt.”

Check-Cashing and Advance Payment Services, Pawn Shops, etc. These businesses thrive on your financial distress.

Bankruptcy Attorneys This is their line of work as well. Unless your current assets and future potential warrant it, declaring bankruptcy may not be necessary. For more details, read this article on What Bankruptcy Is and How It Works.

Family, Friends, and Society Finally, the burden of significant credit card debt often comes with a heavy social stigma and shame. Many believe that not repaying debts reflects poorly on your character.

It doesn’t matter if you’re a single parent working tirelessly and still relying on credit to meet basic needs. Or if you’ve lost your job, faced unfavorable government policies, or accrued medical expenses. The prevailing sentiment is often one of blame.

While those who care for you may not wish for you to remain in debt, they might assume you’ve acted irresponsibly.

Remember, You Have a Choice! You can either succumb to feelings of shame or prioritize your well-being and that of your family over corporate gains or societal opinions. Your financial management is a personal decision as well as a business one.

Here’s What You Can Do: You Can Simply Stop Making Payments. Yes, Really. There is no such thing as debtors’ prison. Your life won’t end. In fact, by freeing yourself from the weight of debt, you can begin anew. Embrace the opportunity for a life without debt, commit to living within your means, and take the time to learn about financial management and wise investing.

But First, You Need a Plan. I invite you to follow me for the next article, where I’ll lay out practical steps for your consideration. Or subscribe to receive it via email. Thank you—here’s to your financial freedom!

Here’s Part 2: How To Walk Away From Credit Card Debt

Disclaimer: This information is intended for informational and entertainment purposes only. The insights shared are based on the author's personal and professional experiences. Readers are encouraged to conduct their own research and are solely responsible for their actions.

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