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avatar You are viewing an archive of articles by Jeremy Simon. Jeremy M. Simon writes about credit scoring, economic data, credit card crime and other issues for CreditCards.com. He is a blogger at Taking Charge. Jeremy is a graduate of Vassar College and has previously worked for Thomson Financial in New York City, where he wrote about the stock markets. View 's Google Profile.

Jeremy Simon


This is a guest article by Jeremy M. Simon, a reporter and columnist for CreditCards.com. He is a blogger at Taking Charge.

They’re lumbering toward you, their eyes dead and arms outstretched. And they’re hungry.

No, personal finance readers, I’m not talking about debt collectors: I’m talking about zombies, which over the past several years have latched their cold fingers onto the cultural consciousness and refused to let go. Turn on the TV (AMC’s “The Walking Dead”), open a book (“The Zombie Survival Guide”) or visit a movie theater (“Zombieland”) and it’s nearly impossible to escape them.

But when we switch off the show, close the book or walk outside, we’re confronted with an economic reality that’s every bit as scary: Look around and you can’t avoid seeing the ravages of unemployment, foreclosures and debt. Like the remaining survivors of a zombie apocalypse, the recession may be over, but we’re left to face wave after wave of personal finance challenges that threaten to devour our savings. “It may be just coincidence that interest in zombie films seems to blossom during periods of economic downturn, but I think it’s something worth examining,” Jake Yuzna, curator of the “Zombo Italiano” film series, says in an interview on the Rue Morgue blog.

Experts say there is a connection. “Any time a monster rises to cultural prominence, it is because it does a good job of tapping into and exploring some specific anxieties and fears of its audience,” says Glenn Jellenik, a University of South Carolina professor who teaches a course the horror film genre.

“It’s the same with zombies,” Jellenik says. “They tap into something going on in the culture — they are able to capture or make us feel something we’re afraid of.”

Although Jellenik says it’s not clear exactly what the current crop of undead represents, he says in zombie films and books, the living dead typically embody our external fears. While things may seem fine (for now), everything changes after the zombie apocalypse. Very quickly, a new reality takes shape: A zombie horde wants to eat our brains — and, in an acknowledgment that humanity has lost control, all we can do is react.

That’s why zombies are the perfect monster for our economically challenging times.

“We’re brought down, in a grisly manner, through contagion, by our neighbors,” Jellenik says. “There’s this huge causal chain of failures, but in the end, it’s simple — someone’s going to eat your brains (drain your retirement account) and you’ll become one of them.”

In the case of both a zombie attack and financial meltdown, it pays to be prepared. When it comes to zombies, as Wired.com helpfully points out, “You are basically trying to stay alive and get to a place of safety, as there are likely to be far too many for you to defeat them.” The survivors are likely to be those who stockpile supplies, arm themselves, and aim for the zombies’ brains.

Back in the real world, there appears to be a similar focus on preparing for personal financial challenges — spending less, saving more and becoming self-sufficient. So can we learn something from zombie films? “I think you’re on to something — the texts do seem to be rehearsing methods of preparation and survival,” Jellenik says.

But don’t limit your preparedness studies to zombie films. “You could also look to post-apocalypse movies for examples of super-duper preparers/survivors,” Jellenik says in an email, mentioning films like “The Road” and “The Book of Eli.” These movies involve survivors fleeing cannibals rather than zombies. However, “Their ability to prepare for the worst and provide for themselves is even more impressive, since they’re competing with those cannibals for scarce resources (one of the definitions of capitalism), rather than fleeing mindless brain-eaters,” he says.

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This is a guest article by Jeremy M. Simon. Each Tuesday, his Credit Score Report column addresses a CreditCards.com reader’s question on credit scoring. He selects questions that either best reflect a common reader concern or that highlight some particularly interesting aspect of credit scoring.

Today, Consumerism Commentary is hosting the weekly question-and-answer session with a query from Amber about her credit history.

Dear Credit Score Report,

If I am offered a settlement by a credit card company or an affiliate (debt collector), how will this affect my credit history? I am not in a good position due to the fact that I am more than 90 days behind. However, I want to repair my credit, not make it worse. Any information would be appreciated that may help in my decision. –- Amber

Hey Amber,

If you enter a debt settlement program — and repay a loan for less than you borrowed — expect your credit score to take a substantial fall.

Debt settlement typically allows struggling consumers to repay their outstanding loans for less than the amount of the original debt. However, that process will cause your FICO score to plunge by up to 125 points, and you may get hit with a big tax bill. The good news, experts say, is that better options might be out there, and a good credit counselor can help you sort them out.

“Settling the debt may or may not be the right action depending on her overall financial situation,” says Rod Griffin, director of public education at credit bureau Experian. “There may be better alternatives.”

That ‘s because debt settlement will impact both your credit score and your wallet. Here’s how it works: Once the card issuer (or affiliated debt collector) accepts your smaller repayment, it will appear on your credit report and impact your ability to borrow for years. “Such a notation will be viewed negatively by lenders,” says Rod Griffin, director of public education at credit bureau Experian. “The record will remain on her report for seven years from the original delinquency date of the debt.” During that time, your lower credit score could mean difficulty borrowing money, higher insurance costs, getting denied for apartment rentals and missing out on job opportunities. Additionally, since the Internal Revenue Service views forgiven debt as income, a settlement could cost you at tax time. That makes debt settlement an expensive option. Still, that isn’t reason enough to rule it out. “Settling debts for less than originally agreed will likely hurt her credit scores at first, but doing so could reduce her debt load and allow her to begin reducing other debts she may have,” Griffin says. “The result, over time, is that her credit scores would begin to improve.” If you do decide to go through with a settlement, experts say you shouldn’t agree to anything over the phone. Get the contract in writing and read it carefully before signing.

If debt settlement isn’t for you, experts say borrowers in your difficult position have four main options:

  • Remain delinquent.
  • Come up with extra money to make payments.
  • Work with a credit counselor.
  • Declare bankruptcy.

Let’s take a look at these options, one by one.

Remain delinquent. At this point, Amber, your credit score has probably taken a major hit due to your delinquency. “If she’s already 90 days behind, she’s already got serious damage,” says Sandy Shore, a senior counselor with New Jersey-based consumer credit counseling agency Novadebt. That’s confirmed by data released last year by FICO, creator of the most widely used credit scoring model that bears its name. FICO acknowledged that a single 30-day late payment can cause your score to drop by up to 110 points. You’re currently three times as late with your card payment — and are only getting later as time passes.

Come up with extra money to make payments. So where can you find the money to repay that debt? Start by making a budget: Take a serious look at your finances, comparing the money you earn each month with the amount you spend. You may be able to earn more money (maybe you can find extra work?), decrease expenses (do you need cable TV?) or sell items (do you really need a TV at all?). Use any extra money to pay down your debt and prevent further damage to your credit score.

Work with a credit counselor. Of course, for many of us, budgeting isn’t an easy process. If you need outside assistance to get a handle on your finances, seek out a credit counselor. You’ll have to pay for their services, but these financial experts can really help. “A good credit counselor will find out what the problem is, how she got into this mess and do a budget,” says Shore.

To locate a reputable counselor in your area, seek out a member of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation for Credit Counseling (NFCC). Both organizations’ Web sites offer a way to search for local credit counselors via “find” links on their left-hand toolbars. The counselor you select can make arrangements with your creditors, enabling you to make affordable monthly payments toward eliminating your debt, provided your budget allows it. “A good credit counseling agency will not recommend you go on a debt management program unless you can afford it,” Shore says. Entering a debt management program won’t directly impact your credit score, although it can make future borrowing more challenging.

Bankruptcy. You can also weigh the cost of filing for bankruptcy. Declaring bankruptcy means you don’t have to repay the debt, although that filing will cause your credit to drop even more sharply than a debt settlement — by as much as 240 points, according to FICO. To fully consider what’s involved in bankruptcy, have a free or low-cost initial consultation with a bankruptcy attorney (or even several attorneys) to discuss the details of your specific situation. Shore says to remember that just because you visit an attorney doesn’t mean you have to file for bankruptcy. Additionally, if you do decide to file, “there are ways to re-establish credit after bankruptcy,” she says.

In the end, experts say working with a credit counselor is the best choice overall. “They can help analyze your financial situation, offer possible alternatives to regain control of your personal finances and teach you how to avoid making the same mistakes in the future,” Griffin says.

Good luck!

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