Debt relief may be the answer
07.18.08 - 01:36am
This information will help you with going over your choices and have a better understanding on what you can do when you’re in debt.
By: Joe Sellers
http://www.uscaonline.com/
My name is Joe Sellers and I’ve been helping those that are in arrears with their unsecured credit cards and know the negative consequences it has on their lives. When you have credit card debt and think that the situation is no longer something you can control, you would be smart to make a choice on what to do and make it ASAP. You should not procrastinate until it is too late. As many of you by now already know is that the creditors are not co-operative when you speak to them with problems with your statement. It’s pretty interesting the way it works because when you first obtain the card they are pretty nice people when you talk to them. Then if you contact them to argue against a late or over limit charge and try to have it removed it can be difficult. As if it was not hard enough trying to maintain payments with interest that they are charging on your accounts. How are you supposed to afford the higher payments now? It was painstaking enough to manage your accounts before the interest was raised. This is exactly why U.S. citizens are seeking out other options such as credit card debt settlement vs. credit counseling, or bankruptcy. If you do not know much about these options then I will give you a little bit of an education on them.
Bankruptcy
Prior to 2005 bankruptcy was to be used for debtors who were having serious monetary troubles. Unfortunately it was abused by tens of thousands of Americans who wanted to avoid paying their unsecured debts. They did not want to take responsibility for their misgivings. The credit card industry was fed up with this so they lobbied to have the bankruptcy laws updated. It is now known as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. This would make it much more of a task for the majority of debtors to file for bankruptcy. Bankruptcy should only be considered as your very last choice after you have explored every alternative method. Also you should contemplate the negative aftereffects that will come back later on down the road. You would have to locate a lawyer, go to court and that could cost you a substantial amount of money. There is also the issue of it being on your credit history for a long time. When you fill out any significant application or document, you by law have to answer yes when asked the question about bankruptcy. So this does have a very negative long lasting effect on your credit.
In each direction you turn, either it is advertised on the radio or television, you will hear about credit counseling. A credit counseling company will try to get the creditors to reduce the interest rate on your credit cards. 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 down fall to this choice is even though they reduce the interest rate on your credit card accounts you could still pay back as much as 125% of what you actually owe.
This is because joining 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 credit counseling don’t graduate from the program for missing as much as one payment. Another drawback to credit counseling is that if you have a income problem and are short on your monthly payment they will kick you out of the program right away. They will also bump up your interest back up and the creditor will not let you back on for around one year and perhaps even longer. This could put you right back to where you began, if not in a worse predicament.
Important fact facts you need to know
Where you aware that over 80% of the companies you see on TV, internet or hear on the radio are not the companies you will be working with. They are lead brokers and lead generation sites that sell your personal info to other companies who are willing to pay the highest price. They don’t care about the negative practices involved with these companies. Their main concern is how much money can be made off of you. One way to tell is if when you call any company and they tell you someone will have to call you back shortly and will only give you very brief information. If you fill out the application over the internet you should get a call from that company that day or at latest the next day Monday - Friday. A good way to remember a lot of details is to write everything down especially the name and phone number of the person you were speaking with. Make sure you remember their name to see if it is some other company. So you need to remember with who and where you requested the information. Another thing to remember is to make sure that they are not going to sell your info to other companies, this way you don’t get flooded with a bunch of unwanted phone calls from different companies
Debt Negotiation (also known as debt settlement)
This is the option which can save you the greatest amount of money. A honest credit card debt settlement company will save you at least 40% of what you are said to have to payback. The 40% should cover all of their fees. Just as with consumer credit counseling, you will hear a lot of radio and television ads all the time. These companies are starting up all across America. Some of these companies try to make it appear like they have a magical stick and are going to make all your debt disappear overnight.
There are also some companies that try to use religion and misleading facts to acquire the trust of consumers. Whatever organization you are going to hire it is your responsibility to due diligence on them. You can always start with the BBB (Better Business bureau). You will be able to discover quite a bit about a company from them. If you find out that a company has only been in business for a short time and has a long list of complaints towards them, then you know to stay away. One more thing to keep an eye out for the length of time the company has been around. Some companies only make it a short time before they get terminated or get caught ripping people off. Then some of them only stay around to make as much money as they can and close down just to open up right next door using a new name
Joe Sellers is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.