My name is John Thompson and I have been working with those that are in debt with their credit cards for a while and understand the effects it has on people’s lives. When you have credit card debt and know that this matter is no longer in your hands, you would be smart to make a decision and make it as soon as possible. You do not want to wait until it is too late. As the majority of you already know is that the debt collectors are not helpful when you speak to them with complaints regarding you statement. It’s very fascinating the way it works because when you initially get the card they are the politest people when you are speaking to them. Then if you contact them to dispute a past due or over limit penalty fee and attempt to have it waived enough trying to maintain payments with 8% or even the 7.9 % interest that they are charging on your credit cards. How are you suppose to manage the new payments now? It was dreadful enough to manage before the interest skyrocketed. This is why many U.S. consumers are searching for 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 give you a little bit of an education on them.
Consumer Bankruptcy
Prior to 2005 bankruptcy was to be used for consumers who were going through severe money hardships. Regrettably it was abused by tens of thousands of U.S. citizens who were trying to avoid paying their debts. They didn’t want to be accountable for their misgivings. The credit card industry was fed up with this so they pushed to have the laws changed. It is now referred to as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. It would make it more difficult for most debtors to file for bankruptcy. Bankruptcy should only be considered as your very last choice after you have tried every other debt relief option. Also you should think of the consequences that could come back later on down the road. You would have to find a lawyer, go to court and that could run you a substantial amount of money. There is also the negative effect of it being on your credit report anywhere from 7 to 10 years. When you sign any significant application or document you will always have to say yes when inquired about your previous bankruptcy, so this does have a extremely long lasting effect on your credit. Avoiding bankruptcy is advisable.
Consumer Credit Counseling
Everywhere you look, either it is advertised on the radio or television, you will hear about consumer credit counseling. A credit counseling company will attempt to get the credit card companies to reduce 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 for you. The drawback to this option is even though they reduce your interest charge on your credit card accounts you could still pay back as much as 135% of what you actually owe.
This is because joining this kind of agenda 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 individuals that are in credit counseling don’t finish the program for one reason or another. Another downfall to credit counseling is that if you have a money problem and are cannot make your monthly payment they will kick you off of the program at once. They will also raise your interest back up and the creditor will not let you back on for a minimum of one year and perhaps even longer. This will put you right back to where you started from, if not in a worse predicament.
Credit Card Debt Negotiation (also known as debt settlement)
This is the method where you can save the greatest amount of money. A honest credit card debt settlement company will save you at least 40% of what you owe. The 40% should include all the fees as well. As with consumer credit counseling, you will hear a lot of radio and television ads quite often. These companies are starting up all over the United States. Some of these companies try to make it seem like they have a magical button and are going to make all your debt disappear overnight.
There are even many companies that try to use religion to attain the trust of debtors. No matter what 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 discover that a company has only been in business for a little while and has a plethora 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 companies only survive a couple of years before they get terminated or get caught with their hands in the cookie jar. Then some of them only stick around to make as much money as they can and close down just to open up right next doorafternoon.