Credit Card Debt FAQs
Last year, the average household credit card debt was more than $15,000. That means that consumers in the United States owe over $11 trillion. Needless to say, more and more people are looking for answers on how to deal with mounting credit card debt. In New Hampshire, there is a statute of limitations for how long a collection agency has to contact you regarding a debt.
These frequently asked questions should help you get started.
Q: When paying off my credit card debt, is it OK to pay only the minimum monthly amount?
A: Unlike a lot of other debt, credit card interest can actually increase over time. Paying the minimum payments each month may trap you further in debt depending on the type of card. While you may be able to transfer a balance on a high interest rate card to a lower interest rate card, you need to be aware that the introductory rate will likely increase at some point in time. If you are considering filing for bankruptcy, you should not perform any balance transfers.
Q: Which credit card should I try to pay off first?
A: This will depend on your goals and what types of debt you have as well as the interest rates on your current cards. After you have paid the minimum required monthly payments for your various loans, credit cards, or mortgage, any extra money should be applied to one specific card. Choose the card that has the highest interest rate for the best results.
Q: Can I open a new line of credit to pay off an old credit card?
A: This is very risky. There is no guarantee that it will be worth it since your new card will also have an interest rate that could rise over time. If you are considering this as an option, it is probably best to look into your options in bankruptcy.
Q: I saw/heard a commercial about 24-hour debt elimination, will that work?
A: These types of predatory advertisements are usually fraudulent. Eliminating any type of debt takes time. You can weed out the scams because they generally brag about a quick fix and ask for money up front without considering the specifics of your needs. You don’t have to pay someone to get you out of debt quickly. More times than not, you’d be better off using that same money to just pay down your debt or hire an attorney. Steer clear of companies that claim they can eliminate years' worth of debt in a few hours or days.
Q: Can hiring a credit card debt settlement company affect my credit score?
A: Like bankruptcy, debt settlement can potentially hurt your credit score if you go through a debt settlement company. Some of these debt settlement companies advise you to skip payments or attempt some sneaky maneuver to avoid your debt. This will only make your situation worse. It is important to find a reputable company.
Q: Can I use a secured credit card to improve my credit?
A: Secured credit cards can be a good way to start rebuilding your credit. Unlike a traditional credit card, secured credit cards require money to be deposited for collateral. For many people with bad credit or a lack of credit history, this can be a good option for improving your credit score.
Q: What should I do if I am being harassed by collection agencies?
A: If you are being harassed by a collection agency, take note of when and how many times you have been called as well as what number they are calling from each time and the time of day. If possible, get the representative’s name. The FDCPA (Fair Debt Collection Protection Act) is meant to protect the rights of Americans. It specifies how and when a collection agency or creditor can get in contact with you.
Credit card debt is easy to get into, but difficult to get rid of. Stay informed of your rights and responsibilities. If you still have questions, or would like more information on credit card debt in New Hampshire, contact a qualified bankruptcy attorney.
By Bankruptcy Attorney Kelley