Hello my name is Joe Sellers and I have been working with people that are in arrears with their unsecured credit card debts for a while now and know the negative effects it has on their lives. When you have credit card debt and know that this matter is getting to be out of control, you must make a decision and make it as soon as you can. You do not want to procrastinate until it is too late. As many of you must already know is that the collectors are not polite when you contact them with issues regarding your statements. It’s extremely interesting the way it works because when you first get the card they are very polite people while you are on the phone. Then they are different if you call against a late or over limit, or penalty fee and try to have it removed. It can be hard enough to try and maintain payments with 8% or even the 7.9 % interest that they are charging on your accounts. How are you suppose to come up with the elevated payments now? It was cumbersome enough to manage before the interest was raised. This is why many U.S. consumers are seeking out other options such as credit card debt settlement vs. credit counseling, or bankruptcy. If you are not familiar with any of your options then I will offer you a little bit of knowledge to help out.

Did You Know?

More than 80% of the debt settlement companies you see advertised on TV, internet or hear on the radio are not the companies you will be working with. They are lead brokers that sell your info to other companies; this is why, when you call them they tell you someone will contact you back shortly. 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 and not some other company with a different name. So you need to remember with who and where you requested the information. If it was over the internet make sure that is the company and that they are not going to sell your info to other companies, this way you don’t get flooded with calls from a bunch of different people.

Bankruptcy

Prior to 2005 bankruptcy was to be used for consumers who were having severe money problems. Sadly it was abused by way too many debtors who were attempting to evade paying their debts. They didn’t want to take responsibility for their actions. The credit card companies were sick and tired of this so they pushed to have the legislation changed. It is now known as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. It would make it harder for the majority of consumers to file for help. Bankruptcy should only be made use of as your last resort option after you have considered every other debt relief method. Also you should think of the consequences that will come back later on down the road. You would have to hire an attorney, go to court and that would cost you a lot of your hard earned income. There is also the problem of it being on your FICO history anywhere from 7 to 10 years. When you sign any significant application or document you by law have to answer yes when asked the question about bankruptcy, so this does have a extremely long lasting effect on your credit.

Debt Consolidation Credit Counseling

Everyway you turn, either on TV or the radio, you will hear about credit counseling. A credit counseling firm will try to get the creditors to reduce the APR on your credit cards. You then make one monthly installment to the credit counseling firm and they then pay each one of your creditors on your behalf. The drawback to this option is even though they reduce your interest on your credit card balances you might still pay back as much as 125% of what you currently owe.

This is because with this sort of program you will still be paying back what you owe plus some of the interest for around possibly five years or more. Almost seventy five percent of the debtors that are in these programs don’t complete the program for missing as much as one payment. Another problem to credit counseling is that if you have a cash flow problem and are cannot make your monthly payment they will boot you out of the program straight away. They will also raise your interest back up and the creditor could keep you off the program for around one year and on some occasions even longer. This will put you right back to where you started from, if not in a tougher situation.

Credit Card Debt Settlement

This is the method which can save you the most amount of money. A good credit card debt settlement company will save you at least 40% of what you owe. The 40% should include all the fees as well. The same with credit counseling, you will hear a lot of radio and television advertisements quite often. These organizations are starting up all across America. Some of these companies try to make it seem like they have a magic stick and are going to make all your debt vanish overnight.

There are even many companies that try to use religion to gain the trust of people. Whatever company you are going to hire it is your responsibility to do research on them. You can always start with the BBB (Better Business bureau). You may be able to uncover a lot about a company from the BBB. If you soon realize that a company has only been in operating for a little while and has a lot of complaints against them, then you know to stay away. One more thing to look for is how much time has the company been around. Some organizations only make it one or two years before they get terminated or get caught with their paws in the cookie jar. Then some of them only stick around to earn as much as possible and close shop just to open up down the street a couple days later.

Joe Sellers is a credit card debt analyst with the US Consumer Advocate and specializes in Credit Card Debt Reduction. Also known as Debt Settlement or Credit Card Debt Relief

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