Fixing Credit Card Debt in Virginia
Though not hit as hard as some states by the current economic crisis, Virginia has certainly not escaped scot-free. As of July 2009, VA's unemployment sat at 6.9%, up 2.8% from just a year ago. Areas along the state's southern border have been hit the hardest, with unemployment rates there consistently higher than 10%. This puts these areas among those hit hardest in the nation. These unemployment rates have lent themselves to a rise in bankruptcy filings in VA, which have gone from 2.5 filings out of every 1,000 people in 2007 to 4.63 in 2009. While both unemployment and bankruptcy have been worse for those who live in the rural areas of Virginia, people in Richmond, Norfolk, and Virginia Beach have not been spared some difficulty.
Both the rising unemployment rate and the rise in bankruptcy filings have participated in a higher rate of credit card use by many Virginians. Because FICO scores in Virginia have remained relatively high, around 700, which is above the national average of 693, credit has been easily accessible to many in the state. The average credit card debt in VA is only about $2000 per family, which is low in comparison to the national average of $8000. However, much of that debt is carried by people in VA who are already struggling financially. Many of these people now carry multiple credit cards in order to pay everyday expenses because they no longer have an income, or their income is insufficient to meet their needs.
If you are a Virginian struggling under credit card debt, know that there are solutions out there for you. It is possible to avoid the debt spiral that can come from losing a job, facing unexpected expenses, or simply overextending yourself when it comes to credit. The first things you will want to do are to educate yourself and find out exactly where you stand. It is important to start this process before you are in serious trouble with your debt. That way, you'll have the time to absorb the necessary information as well as to take your time making your decision.
When it comes to research, the internet is your friend. The State of Virginia has some resources, or you can find articles on sites like this one that will tell you what you need to know. Research the concepts until you could explain them to someone else. That's when you know them well and have absorbed them into your view of the world.
What is a FICO Score
To find out where you stand, request a credit report and FICO score from one, two, or all three of the major national credit bureaus (TransUnion, Experian, and Equifax). Each one of these agencies keeps a separate record of your credit, including sources of debt, how much you owe to each source, your payment history, and how long you've had each debt. From these, the bureau will calculate your credit score (or FICO score), a number between 300 and 850 that tells lenders how much of a risk they take in loaning to you. The lower the number, the higher the risk. A credit score above 700 is excellent, 680-699 is good, 620-679 is ok, 580-619 is low, 500-579 is very low, and below 500 means you definitely need some credit help.
You can also check your credit report for inaccurate items. These can be mistakes that credit card companies have made in reporting your financial information or evidence that someone has opened credit lines illegally in your name. Each mistake will lower your credit score. If you find evidence of either mistakes or fraud, contact the credit reporting agency and work with them to fix your credit report. You may want to bring in a professional debt reduction company to help you with this, as they are trained to work with the reporting agencies.
In addition, you will want to determine how much you can do on your own to reduce your debt. Keep track of your income and expenses for a month, writing down every single item that you spend money on and every single penny that you make. If your problems are too pressing to do this for a month, do it for at least a week. But the longer you can keep track, the better idea you'll have of your average spending habits. Once you have a list of income and expenses, make a list of the spending that is absolutely necessary. This includes rent or your mortgage payment, groceries, utilities, your car payment, and any regular medical expenses you may have. Compare this number to both the amount you spent over the month and the amount you made to see if there is any flex room in your spending. If you see that you've spent a lot on non-essential items, you can put that amount toward your debt instead. If, on the other hand, your income is not enough to cover your essentials, you will need to find another solution.
Finally, check to make sure that you are being treated fairly by your credit card company. Congress recently passed a bill on credit reform. It is designed to protect credit card customers from fraudulent and deceptive practices by credit card companies. It also requires that credit card companies notify customers beforehand of interest rate hikes and provide customers with other information that will help them manage their credit cards responsibly. If you have not been treated fairly, you may be able to contest some items in your credit report.
Choosing the Best Personal Solution to Eliminate Debt
After you have some information on credit card debt and you know where you stand, you'll be able to choose the best personal solution to eliminate your debt. There are many options out there for you, including but not limited to: debt consolidation, debt settlement, and filing for bankruptcy.
Many people who are struggling with credit card debt choose debt consolidation as the best way to remedy their credit problems. Debt consolidation involves taking out one large loan to cover several smaller ones. This is particularly useful when most of your debt comes from credit cards, because credit cards usually carry higher interest rates than traditional loans. These consolidated loans are usually secured against some large asset that is used as collateral. Home equity is the most common of these large assets to be used in debt consolidation loans.
When looking into debt consolidation, most people turn to debt repair specialists. Trained in debt reduction, these professionals can offer the best advice when it comes to finding the lender that's right for you. They can also engage in advocacy for you on a personal level, negotiating between various lenders for the best interest rates, payment plans, and loan conditions for you.
Whichever method you choose to manage your debt, know that facing the problem directly and finding your own personal solutions is the best and most courageous thing you can do for yourself. Instead of avoiding the problem, you will be solving it, which will give you a financial boost as you move forward in your life. In Virginia, you have the luck of being surrounded by a decently strong economy, which will help support you as you make your move out of debt.
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State Guides to Credit Card Laws
- North Carolina
- West Virginia