We know that financial problems can strain a marriage and in fact stress the entire family. How does a family manage debt without making that hole deeper? With predatory lenders advertising at alarming rates, not to mention alarming interest rates, it is no wonder some families end up compounding their debt rather than alleviating it.
Do any of the following facts surprise you?
- Couples or families that borrow even more money in an attempt to get out of debt are the number one source of profits for many lenders. Predatory lenders target families in debt for high interest loans and programs.
- High interest rates and increased interest rates after a family falls behind on payments can end up making interest the largest percentage of the debt owed, often well beyond the original amount borrowed.
- Late fees and over limit fees make up about 30% of the profits lenders, especially credit card companies, rake in. Families who have trouble making minimum payments will find their payments doubled or tripled by fees, creating a vicious circle of increasing debt.
- The new bankruptcy law favors lenders while doing basically nothing to limit predatory lending tactics, often at least partially the culprit behind extensive debt. This may well make filing bankruptcy a useless option for many overburdened families.
- Debt consolidation companies are not usually “free” as claimed, and many are outright scams. There are other variables as well, so be sure to research companies carefully before signing up with one.
Paying only the minimal payments will guarantee that you will be paying off debt, a lot of it being interest, for years to come. Try to pay even a little more than the minimum and make sure to note that the extra amount is to be paid against the principal. Please see the following articles for more information:
Five Tips for Working with Creditors
Five Common Mistakes People Make When Dealing with Creditors