Unsecured Debt Is the Worst Form of Debt Possible

1. Unsecured debt has the highest interest rates of any debt possible. America used to regulate borrowing rates through usury laws — and these laws were on the books for years to protect hardworking families from being taken advantage of by unscrupulous lenders who charged too much. But those laws got wiped out throughout the USA by systematic lobbying by our elected officials. We voted for them and they sold us out. So, for the past few decades, banks and others have been able to charge "whatever they want." Other countries kept regulations on their bank rates and they don't have the middle class meltdown that threatens this country and your budget. Why is it that our elected officials still haven't touched a bank's ability to charge you "as much as they want?" If your elected officials won't save you, you'd better save yourself.


2. It never seems to go away. Because unsecured debt has unlimited high rates, fees and costs, you can't seem to get rid of it. You pay every month, but it won't go down. This is no accident, and the industry relies on it. They want to make sure you pay forever and don't pay them off. Paying them off kills their gravy train. They live off minimum payers, late fees and overcharges. Debt payment without debt reduction means you're in personal servitude to your credit card companies. Most cards have a 20- to 30-year payout. That's a lot of painful monthly payments.

3. Unsecured debt produces nothing good. No matter how hard it is to pay, it never produces a car or a house, but only pain for your family and profits for wealthy lenders and bailed-out banks. It's the most wasteful form of debt imaginable — it pays interest, not true good purchases. The bills come years after the goods are gone. There's no paid-off house at the end of the rainbow. Credit cards were invented to help retailers and lenders at the expense of hardworking people like you.

4. Unsecured debt is overly tempting. The idea of buying now and making small monthly payments is as old as commerce. It gets you into trouble unless you protect yourself through knowledge and restraint. The payments are never small and they're forever, not for a few months. They assure that you'll never reach your financial goals. Keep borrowing and you'll never save. Instead, break the cycle: save and you'll never borrow.

5. Unsecured debt is too easy to obtain. It's everywhere for everyone. It's on TV, on the radio, and on college campuses to greet your kids. It comes in the mail for everyone with a job or without, with good credit or bad credit. It's preapproved misery for you and your family, and anyone can get it anywhere.

6. Unsecured debt robs your paycheck. As debts mount and payments continue, more and more of your pay really isn't yours. You work more and more hours for pay you'll never see or never enjoy. You work to pay your past bills. You work hard every day to pay taxes and lenders, all at the expense of you and your family. You go to work, but they get your pay — and they know it and they set off to trap you and your family with that very goal in mind. You work and they get your pay month after month, year after year. Unsecured, preapproved credit is a one-way ticket to financial servitude.

7. Unsecured debt always leads to more debt. Once you borrow at their highest rates, the cost of that borrowing will lead to further borrowing. Borrowing makes balancing your budget that much more difficult. This then leads to more borrowing, higher monthly costs and a budget that's impossible to balance. It's no wonder people have trouble paying their mortgages and find themselves charging groceries or gas on credit cards.

8. Unsecured debt is entirely based on deception.

  • Credit card offers are sent to you even if you don't request them.
  • They come with teaser rates like no interest for six months or "low monthly payments."
  • They offer "cash back," "reward miles," and other false advantages.
  • They show status — in that you've arrived and you have got a "gold card" or a "platinum card". In fact, no one with money or status got it from a credit card. Instead, you have a plastic invitation to misery.
  • They take advantage of young people who want to feel like they have the adult status of a credit card. They take advantage of older people with limited or fixed incomes who may have worked all their lives only to end up enslaved to their credit cards.
  • They claim that "Visa is life" yet it really just takes your life.
  • They encourage you to never pay cash, even for the smallest purchases.
  • They rely on "fine print" or no print to deceive you or entrap you.
  • They claim to help you budget when, in fact, they rob your budget.
  • They can boost your rates, or cut your credit lines, for whatever reason they deem acceptable.
  • They use deceptive practices to encourage late fees, over limit fees, fees for cash advances and hidden fees.
  • They deceptively align themselves with good causes like the Olympics, football, colleges and ministries, savings programs, movie actors and cash back — they're a "wolf in sheep's clothing."
  • They charge exorbitant rates beyond the normal realm of any other reasonable industry. They borrow at rates below 2 percent and lend at rates over 20 percent or 30 percent.
  • They each say they're different than some other card issuer, when in fact, they're all the same and they're all bad.
  • They're deceptive about who they are. Who is Visa or MasterCard or American Express? They're trademarks or logos that collect money and fees for any bank willing to use them to get to you.
  • They charge hidden fees to merchants, thereby raising the costs for everyone on everything he or she buys. It's not just for emergencies; you don't need a credit card. They call it credit, but it's really debt.

9. Unsecured debt takes from the hardworking middle class to give to the very wealthy few. Let's face it. The rich don't need to use credit cards, they rely on savings. The wealthy use credit cards for free airline miles and upgrades. They sit in the front of the plane while you just dream of a simple vacation. Credit cards pander to the middle class, rely on the middle class, prey on the middle class and cause the middle class to live like the poor and become poorer. They purposely encourage the middle class to obtain the belongings of the wealthy by spending above their means and then living from paycheck to paycheck.

The truth is that hardworking middle class folks paying credit card debt create wealthy bank executives, Wall Street bonuses, stock windfalls, wealthy investors, politicians owned by bank lobbyists, and a restricted future for our children. It's the many giving to the few.

10. Unsecured debt leads to foreclosure, poverty and loss of retirement. Payments on unsecured debt rob people of the opportunity to stay current on their mortgages, repair their homes, fix their cars, save for the future, or plan for retirement. Credit card payments (for interest rates) take from other more productive uses of money and leave workers unable to pay for their homes or properly care for their families. Especially now, in a world of limited resources, paying one bill can mean an inability to pay another. Thousands of families lose their homes across Connecticut as they make payments to high-interest credit cards and miss mortgage payments. Taking income from house payments to pay credit card debts is the most common mistake made by Connecticut families in economic hardship.

11. Unsecured debt creates low wages, dead-end jobs and lack of economic mobility. The average wage earner has become so enslaved to his or her monthly payments that he or she can't afford to bargain for higher wages, change careers, go to school or better themselves economically. These people can't make good changes or plans for their families' futures because they've got "bills to pay." Unsecured debt traps people by denying opportunities for betterment as they just hold on in hopes of making ends meet.

Unsecured debt takes advantage of your worst habits, and relies on your best. Once they've got you to spend, they then rely on your good habits — hard work and sacrifice.

The credit card companies rely on your hardworking ethics and your willingness to do anything to pay your obligations. They know you'll work harder and harder and deny yourself everything possible just to make good on your bills. They know people do care immensely about paying their bills properly, on time as promised, no matter what the cost to their families, their sleep or their health.

12. Credit card companies know that people all want to have nice things now. It's a bad habit, but it's true — we're a nation of consumers that wants the latest and greatest now, and they spent decades encouraging all of us to do just that. Madison Avenue sells it, Wall Street finances it, and Main Street pays it. It's a vicious cycle that starts with temptation and a lack of patience. It's a cycle we're all prone to and they rely on.

13. Credit card companies rely on the myth of credit score. What about my credit score? Five words that enslave America. Even when your life is falling apart, everyone still asks, "What about my credit score?"

The credit card companies created credit score, the myth of credit score and your willingness to sacrifice everything to save your credit score. Credit card companies created the credit score as a means to extend their reach, market their products and limit their costs. It was done in the mid 1980's as a way to avoid the hard work involved in proper underwriting, the analysis of individual debt-to-income ratios. It was hard work and they wanted to avoid it, and they did by reliance on credit score. Unfortunately, you can't avoid it. Your budget is hard work and it is based on debt-to-income ratios and other realities — not the myth of credit score. Credit score can't replace savings.

Once they give debt to you based on credit score, they use your desire to keep your precious credit score as a threat to make you pay. Now you're paying unsecured debt you can't afford just to keep your credit score. In 1985 our office said credit score would lead to the death of Connecticut's middle class. Stop being enslaved by your credit score!

14. Unsecured debt creates discouragement. Because unsecured debt is so difficult to pay each and every month, it causes borrowers to believe that they'll always fail; they'll never have success. It creates a sense of despair that promotes all types of other problems, while preventing solutions that really could work. Many people say they don't sleep well as a result of unending worries, or even fear, about payment. Meanwhile, the immediate results of nonpayment or even late payment and the costs and threats associated with any missed or late payment are overwhelming. Credit card companies are not forgiving. They make endless collection calls, charge excessive fees, raise rates, and cut credit lines within days of a missed payment.

All this leads people to believe that there is no alternative or hope, often in complete privacy. Many people report living in a hidden world of debt problems without ever discussing it with their best friends. People reach a point of complete discouragement and don't even seek the knowledge or help that could ultimately set them free. They become paralyzed.

GOOD NEWS: In the hands of proper professionals, unsecured debt is easily negotiated. Unsecured debt is the easiest form of debt to cure. They yell loud because they can't do anything. All collectors back down immediately when we get on the phone because they are aware that we know the rules of their trade, and how easy it is to negotiate unsecured debt. They lose their attitude when they speak with us.

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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.