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Credit Card Debtors Finding Emotional Support Online

March 20, 2009 01:10 PM
by Shannon Firth
Online and in-person support groups for people saddled with credit card debt are increasing in number and popularity due to the hardships of the recession.

Credit Card Debtors Turn to Support Groups

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This week it was announced that credit card defaults in the United States reached their highest level in 20 years, and the problem is likely to get worse as the recession continues.

“Analysts estimate credit card chargeoffs could climb to between 9 and 10 percent this year from 6 to 7 percent at the end of 2008,” writes Reuters. “In that scenario, such losses could total $70 billion to $75 billion in 2009.”

The strain of unpaid credit card accounts has debtors so overwhelmed they’re seeking support from outsiders. Organizations like Debtors Anonymous and Meetup.com, which hosts meetings on and off the Web for debtors, have seen increased membership, while postings on iVillage’s debt-relief message boards have increased by 81 percent, according to a June article in The Wall Street Journal.

“Debtors Anonymous has been bringing borrowers together to battle what it calls ‘compulsive debting’ for decades. But for years, the group's growth was hampered by the social stigma surrounding money problems,” wrote the Journal’s Jennifer Levitz. But the country’s economic troubles are “making more people ready to share sensitive debt problems with strangers.”

And with credit card debt on the rise, the need for such services is likely to keep pace. Dow Jones reports that card users are paying less of their monthly balances, indicating that they are likely to fall behind on their payments.

Analysis: Do support groups work?

As Americans fall further into debt, more may be turning to support groups for help. But do they work? The “Women in Red Racers,” an online support group especially for women, helped members such as Alexis Sheppard get support in managing her family’s mounting debt.

Following one member’s advice, Sheppard ended her caller ID plan, an $11 per month savings. The Racers have a simple three-step method for climbing out of debt that seems to work; last year, the 400 or so women in the group were able to repay $1.6 million in debt.

Siobhan Leftwich of Black Enterprise gives advice on how to find effective support groups such as Debtors Anonymous, Shopaholics Anonymous and iVillage Debt Support Group.

“Look for one in which members talk about how they're working toward becoming debt-free—not about how they've been going to meetings for several years and are still in debt,” she writes. “Also, keep in mind that members are not certified financial counselors, but people in your community who have decided to join with others in an effort to eradicate their debt.”

If support groups don’t help, she suggests calling a credit counseling agency for help negotiating payments plans and consolidating debt.

Reference: More help for credit card debt

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