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Get Out Of Debt - Articles SurfingDo you ever feel like you know just enough about debt to bedangerous? Let's see if we can fill in some of the gaps with thelatest info from debt experts. Debt problems, debt consolidation programs and debt managementare so pervasive in society today, I thought I might share aunique perspective you may not be aware of. This point of view is from a business standpoint. *Do you want to know why you receive endless streams of creditcard offers? *Are you curious why creditors hardly ever show up for consumerbankruptcy hearings to dispute your filing? *Have you wondered why debt consolidators are all over the TV,radio, print and internet? Quite simple: it's a business. Need proof? Of course you do. Have you ever looked at a credit card company's quarterly filing(10-Q) or yearly filing (10-K)? You may be surprised at whatnuggets of information you find. For the purpose of illustration, I've chosen two leading New YorkStock Exchange (NYSE) traded companies. Both shall remainnameless, yet the facts can be gathered and confirmed quicklywith a little research by you. > Credit card company 1: For the quarter ended March 2005,default rate was 3.5% So far, we've uncovered some interesting facts about debt. Youmay decide that the following information is even moreinteresting. > Credit card company 2: For the quarter ended March 2005,default rate was 3.0% What does this mean? It means about 3 - 3.5 out of every 100people they issued credit cards to couldn't pay them back andwere written off. Why is this important? It's a NUMBERS GAME. This is built into their business model andtaken into account when they issue these mass "pre-approval"letters and sign up new customers. They know a percentage of youwill never be able to pay them back. It's a risk they are willingto take. What's more is both companies still made huge profits (and oneeven announced a quarterly dividend!). > Credit card company 1 still managed a $500 million net incomefor this quarter. > Credit card company 2 still managed a $515 million net incomefor this quarter (before one-time charges). How do debt consolidators fit into the equation? Before youconsider bankruptcy or defaulting on your balance, their job ispersuade you to pay back these credit card companies an amountyou can better afford. In return, these debt consolidatorsreceive a flat fee or % of your outstanding balance. By performing this service, the credit card companies make moremoney than they would had you simply defaulted - and debtconsolidation becomes a booming industry. With average familydebt between $8,000 - $10,000 (and growing) you now can see thebusiness side of this. The bottom line is money. Before you get severely depressed or consider doing somethingrash you might regret later, remember that this is a business.Customer default rates are built into each credit card company'sbusiness model. They know a certain percent of you won't ever beable to pay them back. Yet, they are still raking in the money and printing pre-approvedcredit card offers at an incredibly rapid rate. The bottom line here is to understand the corporate perspective.If you cannot pay back your creditors or are in a hole so deepyou cannot get out of, shed the stigma and obligation of "I mustpay them back or else the apocalypse will come to me." To them,you are just a number, a figure, a percentage. Take this knowledge and choose the best option for YOU to get outof debt.Repeat this phrase: it's not personal, "it's business." Hopefully the sections above have contributed to yourunderstanding of debt. Share your new understanding about debtwith others. They'll thank you for it. Talbert Williams 2001-2006 All Rights Reserved
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