My name is Steve Bis and I’ve been helping consumers that are in debt with their credit cards for a long time and am aware of the effect it has on someone’s life. When you have credit card debt and think that this matter is no longer something you can control, you must make a choice on what to do and make it as soon as possible. You should not put it off until it is too late. As many of you bye now already know is that the debt collectors are not co-operative when you speak to them with problems with your bill. It’s pretty exciting the way it works because when you initially get the card they are very polite people on the phone. Then if you call them to argue against a past due or over limit charge and attempt to have it waived enough trying to keep up with 10% or even the 7.9 % interest that they are charging on your accounts. How are you suppose to manage the elevated payments now? It was cumbersome enough to manage before the interest was raised. This is exactly why Americans 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 offer you a little information on them.
Bankruptcy
Before 2005 bankruptcy was to be used for people who were having serious money troubles. Regrettably it was misused by thousands of Americans who wanted to avoid paying their credit card debts. They didn’t want to be accountable for their actions. The credit card industry was fed up with this so they pushed to have the legislation updated. It is now referred to as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. It would make it much more of a task for many consumers to file for bankruptcy. Bankruptcy should only be used as your very last choice after you have explored every other debt relief option. Also you should understand the negative aftereffects that could come back later down the road. You would have to find a lawyer, go to court and that could cost you a substantial amount of your hard earned income. There is also the issue of it being on your FICO history anywhere from 7 to 10 years. When you are signing any important application or document you will always have to answer yes when inquired about your previous bankruptcy, so this does have a long lasting effect on your credit.
Credit counseling
Everyway you turn, either on TV or the radio, you will hear about consumer credit counseling. A credit counseling firm will attempt to get the creditors to reduce the interest on your credit accounts. You then make one monthly payment to the credit counseling firm and they then make your payments to each one of your creditors for you. The down fall to this method is even though they reduce your interest charge on your credit card balances you very well may still pay back as much as 130% of what you currently owe.
This is because with this sort of plan you will still be paying back what the full original balance was plus some of the interest for around 4 to 7 years. Almost 75% of the debtors 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 cash flow problem and are short on your monthly payment they will boot you out of the program at once. They will also bump up 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 will put you right back to where you began, if not in a tougher situation.
Debt Negotiation (also known as debt settlement)
This is the method which can save you the largest amount of money. A good debt settlement company will save you at least 40% of what you actually owe. The 40% should include all the fees as well. Similar to credit counseling, you will hear a lot of TV and radio advertisements very frequently. These organizations are starting up everywhere across America. Some of these companies try to make it appear like they have a magic wand and are going to make all your debt vanish instantly.
There are even many companies that try to use religion to obtain the trust of debtors. Whichever organization you are going to use it is your responsibility to do research on them. You can always begin with the BBB (Better Business bureau). You will be able to find out a lot about a company from the BBB. If you realize that a company has only been in operating for a short time and has a lot of complaints towards them, then you must stay away. Another thing to look for is how long has the company been around. Some organizations only last 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 make as much money as they can and close down just to open up right next doorday.
Texas debt settlement is one of the best kinds