Common Problems With Debt

• Eliminate your debt to get back in financial control.Debt concept - cutting a credit card image by Sophia Winters from Fotolia.com
  
  The United States is a consumer culture. Nearly everything, from cars to food to appliances to homes, can be financed on credit. This can lead to problems, both large and small. Some consumers get caught in the debt trap and find themselves consumed by overwhelming consumer debt. This can be both financially and psychologically burdensome. However, large amounts of debt can lead to other problems besides a simple lack of disposable income.
  
  

Employment

• Credit card debt is no longer confined to personal borrowing behavior. Poor borrowing habits will lead to higher rates and fees, yes, but it can also lead to employment problems. Many employers, especially those at large corporations, now run credit checks on all prospective employees. These companies conduct these checks because poor borrowing habits can sometimes indicate overall lack of responsibility. Therefore, an otherwise qualified employment candidate could be prevented from getting a great job due to a poor credit report.
  
  

Legal Troubles

• Unpaid consumer debt can quickly become a large problem. Accounts that are 30 days overdue or more immediately are transferred to a collection department, usually an internal department in the early stages. However, some companies sell their debts to collection firms when the debt is only 60 days overdue.
  
  Accounts in collections are aggressively pursued. These companies have an incentive to collect, since they purchased the debts for less than the dollar value. Hence, the more they collect, the greater their profits.
  
  If left unpaid, these accounts become court-ordered judgments. If they still remain unpaid, assets can be seized.
  
  

Bigger Loans

• Personal credit tells creditors how well a consumer manages his finances. Those with strong reports are rewarded with low interest rates and fees. This is especially important when it comes to larger loans, such as home mortgages. If a consumer has a low credit score, he will be hampered with a high mortgage rate and high up-front fees. The difference between a great credit score and a low credit score could equal tens of thousands of dollars over the course of a home mortgage.