My name is Joe sellers and I have been helping consumers that are in debt with their credit cards for a quite some time and understand a lot of the negative effects it has on someone’s life. When you have credit card debt and believe that this matter is no longer something you can control, you need to make a choice on what to do and make it fast. You should not put it off until it is too late. As plenty of you bye now already know is that the credit card companies and debt collectors are not co-operative when you call them with complaints regarding your statements. It’s very intresting the way it works because when you first get the card they are very polite people on the phone. Then if you contact them to complain about a late or over limit penalty fee and attempt to have it removed they are not very accommodating to your situation. allthough you may get lucky if the person you are speaking with is in a good mood, they may let it go if you don’t have other penalties in that year. It can be very frustrating dealing with your debt especially when they raise your interest to 19% or higher and you are not expecting it was hard enough trying to keep up with 11% or 12% interest that they are charging on your credit cards. How are you suppose to cover the new payments now? This is exactly why Americans are seeking out other options such as Debt Settlement vs. Credit Counseling, or Bankruptcy. If you do not know much about these options then I will give you a little information on them.
Consumer Bankruptcy
Before 2005 bankruptcy was to be used for debtors who were having serious financial problems. Regrettably it was abused by tens of thousands of people who were attempting to avoid paying their credit card debts. They didn’t want to be accountable for their actions. The credit card companies were sick and tired of this so they pushed to have the laws changed. It is now known as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. It would make it harder for many consumers to file for bankruptcy. Bankruptcy should only be used as your very last choice after you have tried every other debt relief option. Also you should think of the consequences that very well might come back later down the road. You would have to hire an attorney, go to court and that could cost you a substantial amount of your hard earned income. There is also the matter of it being on your FICO report for a long time. When you sign any significant application or document you by law have to answer yes when inquired about your previous bankruptcy, so this does have a extremely long lasting effect on your credit.
Credit counseling
Everywhere you look, either on TV or the radio, you will hear about debt consolidation credit counseling. A credit counseling company will attempt to get the creditors to lower the interest rate on your credit accounts. You then make one monthly payment to the consumer credit counseling company and they then make your payments to each one of your creditors on your behalf. The downside to this method is even though they lower your APR on your credit card balances you very well may still pay back as much as 135% of what you currently owe.
This is because on this sort of plan you will still be paying back what you owe plus some of the interest for around possibly five years or more. Almost 75% of the debtors that are in these programs don’t complete the program for one reason or another. Another draw back to credit counseling is that if you have a money problem and are short on your monthly payment they will boot you out of the program instantly. They will also increase your interest back up and the creditor could keep you off the program for at least one year and sometimes even longer. This could put you right back to where you started from, if not in a worse situation.
Debt Negotiations (also known as debt settlement)
This is the debt relief method which can save you the largest amount of money. A good standing credit card debt settlement company will save you at least 40% of what you currently owe. The 40% should include all the fees as well. Very much like consumer credit counseling, you will hear a lot of TV and radio advertisements very frequently. These companies are opening up everywhere across America. Some of these companies try to make it appear like they have a magic stick and are going to make all your debt vanish out of nowhere.
There are also some companies that try to use religion to aquire the trust of people. Whichever organization you are going to use it is your responsibility to do research on them. You can always start with the BBB (Better Business bureau). You should be able to find out a lot about a company from them. If you discover that a company has only been in business for a little while and has a long list of complaints against them, then you must avoid them. One more thing to look for is how long has the company been around. Some companies only last a couple of years before they go out of business or get caught with their hands in the cookie jar. Then some of them only stick around to earn as much as possible and close down just to open up across town under a new name.
Joe Sellers is a debt analyst with the US Consumer Advocate, which practices debt relief.