Do you ever feel like you know just enough about debt to be

dangerous? Let’s see if we can fill in some of the gaps with the

latest info from debt experts.

Debt problems, debt consolidation programs and debt management

are so pervasive in society today, I thought I might share a

unique perspective you may not be aware of.

This point of view is from a business standpoint.

Do you want to know why you receive endless streams of credit

card offers?

Are you curious why creditors hardly ever show up for consumer

bankruptcy hearings to dispute your filing?

Have you wondered why debt consolidators are all over the TV,

radio, print and internet?

Quite simple: it’s a business.

Need proof? Of course you do.

Have you ever looked at a credit card company’s quarterly filing

(10-Q) or yearly filing (10-K)? You may be surprised at what

nuggets of information you find.

For the purpose of illustration, I’ve chosen two leading New York

Stock Exchange (NYSE) traded companies. Both shall remain

nameless, yet the facts can be gathered and confirmed quickly

with a little research by you.

> Credit card company 1: For the quarter ended March 2005,

default rate was 3.5%

So far, we’ve uncovered some interesting facts about debt. You

may decide that the following information is even more

interesting.

> Credit card company 2: For the quarter ended March 2005,

default rate was 3.0%

What does this mean? It means about 3 - 3.5 out of every 100

people they issued credit cards to couldn’t pay them back and

were written off.

Why is this important?

It’s a NUMBERS GAME. This is built into their business model and

taken into account when they issue these mass \"pre-approval\"

letters and sign up new customers. They know a percentage of you

will never be able to pay them back. It’s a risk they are willing

to take.

What’s more is both companies still made huge profits (and one

even announced a quarterly dividend!).

> Credit card company 1 still managed a $500 million net income

for this quarter.

> Credit card company 2 still managed a $515 million net income

for this quarter (before one-time charges).

How do debt consolidators fit into the equation? Before you

consider bankruptcy or defaulting on your balance, their job is

persuade you to pay back these credit card companies an amount

you can better afford. In return, these debt consolidators

receive a flat fee or % of your outstanding balance.

By performing this service, the credit card companies make more

money than they would had you simply defaulted - and debt

consolidation becomes a booming industry. With average family

debt between $8,000 - $10,000 (and growing) you now can see the

business side of this. The bottom line is money.

Before you get severely depressed or consider doing something

rash you might regret later, remember that this is a business.

Customer default rates are built into each credit card company’s

business model. They know a certain percent of you won’t ever be

able to pay them back.

Yet, they are still raking in the money and printing pre-approved

credit card offers at an incredibly rapid rate.

The bottom line here is to understand the corporate perspective.

If you cannot pay back your creditors or are in a hole so deep

you cannot get out of, shed the stigma and obligation of \"I must

pay them back or else the apocalypse will come to me.\" To them,

you are just a number, a figure, a percentage.

Take this knowledge and choose the best option for YOU to get out

of debt.

Repeat this phrase: it’s not personal, \"it’s business.\"

Hopefully the sections above have contributed to your

understanding of debt. Share your new understanding about debt

with others. They’ll thank you for it.

Talbert Williams 2001-2006