Would it not be very convenient if you had a precise and point wise explanation of the various reasons why debt settlement or debt reduction has become viable? Well, what are you waiting for? Just read ahead and get all the answers to your questions.
For starters, the government has implemented the stimulus package and a significant percentage of the stimulus money has been diverted towards the credit card issuers.
In such a scenario, the loss absorption capacity of the card issuers has significantly increased.
This is one of the primary reasons why credit card issuers are prepared to offer 50% discount.
If they wanted, they could easily offer a 100% discount as well.
This is because they have received billions of dollars, rather hundreds of billions of dollars as assistance.
However, the idea of recovering at least 50% of the amount is based on long term business foresight.
Encouraging the habit of making regular repayment in the credit card holder is going to be beneficial for the holder as well as the credit card company.
That is the reason why the reduction of the debt has been limited to 50%-70% of the total amount owed.
Secondly, people just do not have sufficient cash to pay their credit card issuers.
This may be a difficult thing to believe but it is the truth.
As on date, people just do not have sufficient cash to repay all their liabilities and obligations.
In any case, when all the debts are arranged in a priority, credit card debts and unsecured debts come very low on the list.
This is because securing the loan that has been obtained to buy the house and the automobile always gets more priority.
Remove the house and the automobile and you will be left with absolutely no means to live a respectable life.
That is not the case with credit card debt, right? Hence, card issuers are trying to attract the customers and encouraging them to make regular repayments by offering 50%-70% discount.
Thirdly, the stimulus package implemented by the government has given influence that the government did not posses before.
The sheer number of bankruptcies is not good for the economy.
From the macro perspective, all the participants in the economy, including the average American borrower, are being encouraged to work out a compromise solution where everybody gains some and loses some.
This is the best way to overcome the recession.
Credit card issuers too will stick to this idea.
For starters, the government has implemented the stimulus package and a significant percentage of the stimulus money has been diverted towards the credit card issuers.
In such a scenario, the loss absorption capacity of the card issuers has significantly increased.
This is one of the primary reasons why credit card issuers are prepared to offer 50% discount.
If they wanted, they could easily offer a 100% discount as well.
This is because they have received billions of dollars, rather hundreds of billions of dollars as assistance.
However, the idea of recovering at least 50% of the amount is based on long term business foresight.
Encouraging the habit of making regular repayment in the credit card holder is going to be beneficial for the holder as well as the credit card company.
That is the reason why the reduction of the debt has been limited to 50%-70% of the total amount owed.
Secondly, people just do not have sufficient cash to pay their credit card issuers.
This may be a difficult thing to believe but it is the truth.
As on date, people just do not have sufficient cash to repay all their liabilities and obligations.
In any case, when all the debts are arranged in a priority, credit card debts and unsecured debts come very low on the list.
This is because securing the loan that has been obtained to buy the house and the automobile always gets more priority.
Remove the house and the automobile and you will be left with absolutely no means to live a respectable life.
That is not the case with credit card debt, right? Hence, card issuers are trying to attract the customers and encouraging them to make regular repayments by offering 50%-70% discount.
Thirdly, the stimulus package implemented by the government has given influence that the government did not posses before.
The sheer number of bankruptcies is not good for the economy.
From the macro perspective, all the participants in the economy, including the average American borrower, are being encouraged to work out a compromise solution where everybody gains some and loses some.
This is the best way to overcome the recession.
Credit card issuers too will stick to this idea.
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