Hello my name is Steve Bis and I’ve been working with those that are in arrears with their unsecured credit card debts for a considerable amount of time and know the negative consequences it has on someone’s life. When you have credit card debt and believe that the situation is out of control, you need to make a decision and make it fast. You don’t want to procrastinate until it is too late. As many of you bye now already know is that the debt collectors are not helpful when you contact them with problems regarding you statement. It’s pretty remarkable the way it works because when you first get the card they are the politest people when you talk to them. Then if you call them to complain about a past due or over limit penalty fee and attempt to have it , they may let you off with one a year, if you are lucky. When it comes down to it what choices do you have? It’s not like you can discontinue paying your rent/mortgage or other necessities for you and your familyto make it with day to day living expenses.
The credit card industry made over 17 billion dollars in penalty fees in 2006 and it will be significantly higher this year. Now I am sure that it has happened to you, where you’ve gone and open your monthly credit card statement only to discover that your interest rate has nearly doubled or even tripled. It is hard enough trying to maintain payments with 9.9% or even the 7.9 % interest that they are charging on your accounts. How are you suppose to deal with the elevated payments now? It was horrible enough to manage before the interest was raised. This is exactly why Americans are searching for other options such as debt settlement vs. credit counseling, or bankruptcy. If you are not familiar with any of your options then I will give you a little bit of an education on them.
Bankruptcy
Prior to 2005 bankruptcy was to be used for individuals who were fighting through severe financial hardships. Unfortunately it was misused by far too many U.S. citizens who wanted to evade paying their unsecured debts. They did not want to take responsibility for their actions. The credit card companies were fed up with this so they petitioned to have the bankruptcy laws updated. It is now known as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. It would make it much more of a task for most Americans to file for chapter 7 bankruptcy. Bankruptcy should only be considered as your very last choice after you have explored every alternative option. Also you should think of the consequences that might come back later down the road. You would have to find a lawyer, go to court and that could run you a lot of your hard earned income. There is also the issue of it being on your FICO history for a long time. When you filling out any significant application or document you by law have to say yes when inquired about your previous bankruptcy, so this does have a extremely long lasting effect on your credit.
Consumer Credit Counseling
In each direction you look, either it is advertised on the radio or television, you will hear about credit counseling. A credit counseling organization will attempt to get the credit card companies to lower the interest rate on your credit accounts. You then make one monthly payment to the credit counseling organization and they then make your payments to each one of your creditors for you. The fallback to this choice is even though they lower your interest rate on your credit card accounts you could still pay back as much as 125% of what you actually owe.
This is because with this kind of program you will still be paying back what the full original balance was plus some of the interest for around possibly five years or more. Almost eighty percent of the people that are in credit counseling don’t graduate from the program for missing as much as one payment. Another problem to credit counseling is that if you have a money problem and are miss your monthly payment they will boot you out of the program at once. They will also increase your interest back up and the creditors could keep you off the program for at least one year and on some occasions even longer. This might put you right back to where you started from, if not in a worse predicament.
Debt Negotiation (also known as debt settlement)
This is the avenue where you can save the greatest amount of money. A good standing credit card debt settlement company will save you at least 40% of what you owe. The 40% should include all of their fees. The same with credit counseling, you will hear a lot of radio and television ads quite often. These organizations are opening up everywhere across our beloved country. Some of these companies try to make it appear like they have a magic bullet and are going to make all your debt disappear overnight.
There are also many companies that try to use religion to gain the trust of debtors. Whichever organization you are talking to it is your responsibility to do research on them. You can always begin with the BBB (Better Business bureau). You may be able to discover a lot about a company from them. If you find out that a company has only been in operating for a short time and has a slew of complaints against them, then you know to avoid them. One more thing to keep an eye out for is how long has the company been in business. Some organizations only last one or two years before they go out of business or get caught with their paws in the cookie jar. Then some of them only stay around to earn as much as possible and close shop just to open up across the streetwith a different name] and will continue to do this until the FTC sues and jails them.
You need to feel secure with the person you are speaking with as well as the debt settlement organization. If they are really pushy and trying to get you to sign a document within the first few minutes of the call you need to be very careful. This is not a decision you want to dive into head first. Really, how can a company be sure they can assist you without going over your statements first? There are way too many organizations out there that only tell you all the good things about their program. They tell you not to fret anything. This is a very easy process and nothing negative will ever happen to you. That is a load of you know what. It is not a very easy process and it is not right for everyone. Some consumers still get taken by them because that company sugar coated everything and did not offer them full disclosure. For a lot of debtors credit card debt settlement can really get you back on your feet and out of debt in under three years, while saving you thousands of dollars off your balance.
One more issue to remember is most of the companies earn all their money within the first year and a half of the the program. Now consider this, what motivation will that company have to negotiate the best possible deal on your behalf if they know that they are’nt going to earn any more money from you? There is none! So you see, if an organization knows that why would they keep working on trying to get you a better settlement. This happens all the time. They really could care less at that point. They take anything your collectors’ offer, which means you put out more of your hard earned money You need to find a company that earns its money the old fashion way, by earning it. Make sure they answer all your debt settlement inquries. I hope this has offered you a good understanding of the numerous choices you have to becoming debt free.
