Declining American Credit Card Debt Totals

For more than thirty years, the credit card debt bill for all Americans has gone in only one direction: up and up and up. Indeed, most commentators on economic conditions have warned that the financial strength of the United States will inevitably suffer as a result since other nations examine the solvency of our citizens as an indicator of the health of the overall economy. Still, regardless of such very real concerns, our countrymen and women continued spending and attracting credit card debt like there was no tomorrow. Monetary analysts had reason to worry that such reckless and unchecked purchasing habits would continue to expand the unsecured revolving credit card debt loads at the same rate of the past decade until the nation’s credit ratings hit bottom and our financial system collapsed.

Well, looking at the credit card debt figures for 2009, it appears that the wavering faith in the ability of United States households to alter their more destructive behaviors has been misplaced. All of sudden, without clear cause – and during the relatively flat economic growth that followed the recession, at that – the total amount of the unsecured credit card debt sums owed to creditors fell sharply. Headlines trumpeted a decline of more than ten percent, and, even though such calculations include corporate write offs, consumer actions accounted for a surprising percentage of the credit card debt drop.

Whenever economists talk about the money owed to credit cards, they’re essentially adding together all of the individual balances owed to unsecured lenders who must regularly report their holdings to agents of the United States government. As people pay back the money borrowed, the balances will go down, of course, but the credit card debt totals will also show signs of decrease whenever the lenders charge off unpaid accounts in order to gain the tax benefits. The Internal Revenue Service quietly encourages corporations – so long as they are otherwise running a sizeable profit – to formally discharge their credit card debt holdings.

Once a company announces to the government that they have reason to believe that a consumer has no ability or intention of every satisfying their legally held credit card debt accounts, they can then deduct the amount of the debts from the gross earnings and thereby be liable for a significantly smaller amount of taxes. With that understood, what’s so remarkable about this recent decline in the overall credit card debt has been the relatively minimal charge off totals. From January to April of 2009, fewer than eighteen billion of the sixty five billion dollar reduction in unsecured burdens were even partially the consequence of credit card debt charge offs through corporations.

Writing off credit card debt accounts that do, after all, still exist and had only temporarily disappeared thanks to creative accounting practices might lower the credit card debt bills for the United States on paper, but the artificial elimination of delinquent loans actually suggests a greater problem. In fact, once the loans have been charged off, the borrowers are that much closer to an eventual credit repair and the restored FICO scores sufficient to take out even more credit card debt. The same holds true for equity mortgage loans or any similar consolidation program that switches unsecured debt from revolving credit lines to a lien on tangible property. Second mortgages and credit lines are considerably more difficult to obtain following the recessionary decline in property values, but the most successful companies can still manage to technically erase credit card debt by transferring the balances to the title of a residence should enough equity still exist. It counts as an erasure of credit card debt accounts, but it could lead to additional deficit spending once the balances return to zero.

The Three Keys to Protecting Credit Scores after the Death of a Spouse

Dealing with economic concerns following the loss of a husband or wife will inevitably be difficult. Faced with overwhelming sorrow, the spouse left behind to take care of the household bills will have sufficient trouble just keeping up with the monetary needs of the domestic budget beyond the greater worries about credit scores over the forthcoming days. Hard enough just to wrangle with the intricacies of credit bureaus and FICO scores during the best of times, but crafting a new credit persona absent the help of a life partner could seem unimaginably nerve wracking. Still, as you’ll likely hear too often in the days after your spouse has passed away, life truly must go on, and there are some crucial actions that must be taken during this time of mourning.

Protecting the identity of the deceased, though this may well appear to be the least of the family’s worries, has actually a newfound importance since scavengers of financial detritus and credit offerings will immediately leap upon death notices to further their malevolent plans. Obituary notices, sadly enough, have been the entrance point toward criminal actions for a new breed of credit scavengers, and the surviving spouse must do what they can to shield their husband or wife’s financial legacy from thievery.

For so many spouses surviving the death of the family bread winner, the trick will be not just preventing household accounts from falling into the hands of financial predators but also establishing a new credit portfolio essentially from scratch. So many older men and women realize only too late that they had left the details of the domestic budget to their partners and failed to earn any proper credit history of their own.

There are a number of different acts that have to be initiated from virtually the morning after the funeral proceedings have finished, and, below, we’ve singled out some of the most important steps each surviving spouse should follow for the security – and, in some cases, the origination – of the family credit rating.

1.) Even during the days of mourning just after the death of a loved one, the spouse (or whomever has been put in charge of the household affairs) must take the initiative to contact the credit reporting agencies in popular usage around the United States of America: Experian, Equifax, and TransUnion. Ideally, this will be a formal request with some paper trail for protection of assets in the event of identity theft.

2.) As a vital action, every credit card and revolving debt account must be individually contacted whether through telephone, internet, or the old fashioned postal system. Once again, however, it’s in the best interest of all involved that there be some documentation of the notification, meaning that a traditional typed and mailed piece of correspondence may be most suitable (for that matter, many of the creditors shall demand that the official death certificate be Xeroxed).

3.) For any credit lines jointly held by both spouses, there still needs to be the same attention paid to alerting the lender representatives about the tragic circumstances, but, unfortunately, in most cases, the surviving wife or husband will still have to make payments from then on until the account is fully satisfied. Generally, at the time that the credit card company changes the formal record of obligation, the newly responsibly party could ask for the spending limit and interest rates to be re-priced, but, with lessened income available, the resulting terms could well be worse than they were originally.