No. 60: Understanding Debt
January 20th 2011 23:00
Free enterprise works best when all in the boat are lifted with the tide. It can be very cruel when we go through financial downturns. Since people began congregating, people have owed money. It might be just five ears of corn for a nice arrowhead, but it was still a debt. At first, mankind needed a bigger friend or spear, but coercion generally got the debt resolved. Now, just try owing the mob. You will be thankful if you only get some bruises and broken bones when you are late on a promise. On a less harsh note, if you owe a financial institution, you will still elevate your stress levels.
The U.S. Federal government tells us that we have at least 9.4% unemployment. This is not counting those who have given up trying to find work and receive no further unemployment benefits. When we play with those percentages we see that millions of our neighbors and fellow citizens are suffering. This means that a significant portion of our friends out there are striving just to make mortgage, rent, electrical, medical, water/sewer, phone, and insurance payments. Let alone striving to place food on their tables.
Is it any wonder foreclosures and bank defaults are continuing to rise? Once this sort of downward spiral takes hold, it continues dropping until the day when businesses hire more, and thereby, remove additional people from the stress machine.
Let me state the obvious: Given the difficulties presented by our current economy, it is much more difficult for everyone financially. And for some, it is catastrophic. It does most of us some benefit to imagine what the less fortunate are experiencing.
Let me stop and clear the air here by stating that: When we sign a document or make a verbal agreement with another, it becomes an obligation. Justice dictates that if we make a commitment to someone or entity, that all reasonable efforts should be made to fulfill the obligation. Having said this, there are times when reasonable efforts fall short. Sickness, infirmities, accidents, deaths, and unemployment are a short list for these times.
Conventionally, most people go through regular financial institutions for loans. Laws prevent the physical tortures from them, but they still retain ways to collect. As long as the collectors work within the law, they are simply doing their jobs to help resolve the issue and help their benefactors get money owed them. When collectors harass or violate other regulations, they can be liable to each abused debtor collecting up to $1,000 per instance of abuse. You are encouraged to contact the Federal Trade Commission when you can confirm abuses.
Today, financial institutions use many ways to help make themselves whole with debtors. If the debt is collateralized, they can take the collateral (such as a car or boat) from the debtor and sell it. (No one wants a night raider in their driveway hauling off the beloved possession.) If a balance still exists, they will attempt collecting the difference owed from the debtor. The same methods are used for homes, land, factories, etc.
The stress really gets cranking when a firm hires an attorney, or collection agency. (No, they are not all law firms. Some may be just disguised that way.) Please remember that most of them work on commission. This gives the debtors some leverage!
We have laws regulating collection procedures, but they are not always perfect. Collecting firms can get very crafty, such as sub-contracting to individuals who call from their own homes. This way you may not recognize the calling source via caller ID. Another new tactic is for collectors to utilize computers searching for unused (vacant) telephone numbers within given area codes. When these lists are purchased, the collector can then call posing as a local neighbor or business.
If you are not one of the people experiencing such stressful times, as listed above, then perhaps it will help to read the the next paragraph.
I have long advocated a 13th year should be added to our educational system wherein such courses as Healthful Living, Marriage and the Family, Personal and Social Ethics, Money Management & Investing, and Civics II should be required of the curricula. If the latter two were required now, we would have much less strife and stress in our lives.
While these financial conditions exist, it would help us all to be kinder to those less fortune, if for no other reason than -- we each may be in similar dire circumstances before we know it.
Please keep it between the lines.
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