What can you do when you are drowning in debt
My name is Joe S. and I’ve been working with people that are in arrears with their unsecured credit card debts for a considerable amount of time and know the negative consequences it has on someone’s life. When you have credit card debt and know that the situation is no longer something you can control, you would be smart to make a decision and make it fast. You should not wait until it is too late. As the majority of you must already know is that the creditors are not co-operative when you speak to them with issues with your statement. It’s pretty exciting the way it works because when you initially get 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 enough to try and maintain payments with 8% or even the 7.9 % interest that they are charging on your credit cards. How are you suppose to come up with the money for the higher payments now? It was cumbersome enough to manage before the interest skyrocketed. This is exactly why U.S. citizens are searching for other options such as debt settlement vs. credit counseling, or bankruptcy. If you are not familiar with any of your options then I will offer you a little information on them.
Bankruptcy
Before 2005 bankruptcy was to be used for people who were having severe money troubles. Regrettably it was misused by far too many U.S. citizens who were attempting to evade 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 lobbied to have the bankruptcy legislation updated. It is now known as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. It would make it more difficult for the majority of Americans to file for help. Bankruptcy should only be exercised as your last resort option after you have explored every conceivable method. Also you should understand the consequences that very well might come back later on down the road. You would have to find an attorney, go to court and that would run you a substantial amount of money. There is also the issue of it being on your FICO history for a long time. When you sign any significant application or document you by law have to say yes when asked the question about bankruptcy, so this does have a extremely long lasting effect on your credit.
Credit counseling
In each direction you turn, either it is advertised on the radio or television, you will hear about consumer credit counseling. A credit counseling organization will try to get the creditors to reduce the interest rate on your credit accounts. You then make one monthly installment to the credit counseling organization and they then pay each one of your creditors on your behalf. The downside to this method is even though they reduce your interest on your credit card balances you could still pay back as much as 120% of what you currently owe.
This is because joining this kind 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 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 kick you off of the program without delay. They will also bump up your interest back up and the creditors will not let you back on for around one year and sometimes even longer. This might put you right back to where you started from, if not in a worse situation.
This is the avenue where you can save the greatest amount of money. Any good standing debt settlement companies will save you at least 40% of what you currently 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 all the time. These organizations are starting up everywhere across our beloved country. Some of these companies try to make it seem like they have a magic stick and are going to make all your debt disappear out of nowhere.
There are also many companies that try to use religion to obtain the trust of people. Whatever organization you are going with it is your responsibility to do research on them. You can always start with the BBB (Better Business bureau). You should be able to uncover quite a bit about a company from the Better Business Bureau. If you realize that a company has only been in operating for a little while and has a slew of complaints against them, then you must avoid them. Another thing to keep an eye out for is how long has the company been around. Some organizations only survive a short time 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 down the streetunder a new name.
Joe S. is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.