My name is Steven Bis and I have been assisting people that are in arrears with their unsecured credit card debts for a considerable amount of time and realize the negative consequences and strain it has on their lives. When you have credit card debt and believe that this matter is no longer something you can control, you would be smart to make a decision and make it fast. You don’t want to procrastinate until it is too late. As many of you must already know is that the collectors are not polite when you speak to them with problems regarding you statement. It’s very interesting the way it works because when you initially obtain the card they are very polite people while you are speaking with them. Then if you call them to complain about a past due or over limit penalty fee and try to have it waived , they might let you off one time a year, if you are lucky. When it comes down to it what decision are you going to make. It’s not like you can discontinue paying your rent/mortgage or other necessities for your family to get bye.
The credit card companies made a whopping 17 billion dollars in over limit and late fees in 2006 and it will be considerably higher in the near future. Now I am sure that it has happened to you, where you’ve gone and open your credit card bill only to realize that your interest has nearly doubled in some cases tripled. It is rough enough trying to keep up with 9.9% or even the 7.9 % interest that they are charging on your credit cards. How are you suppose to come up with the elevated payments now? It was cumbersome enough to manage before the interest skyrocketed. This is why many Americans are seeking out other options such as debt settlement, credit counseling, or bankruptcy. If you do not know much about these options then I will give you a little information on them. Hopefully this will clear things up a little.
You need to know that 80% or more of the companies you first get in contact with are not the companies you will be working with. They are lead brokers that sell your info to other companies, So if it is an application you fill out or a call listen closely too the name they use and start asking questions to make sure it is the same company that is why when you call 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. 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 personal information to another company
Bankruptcy
Before 2005 bankruptcy was to be used for individuals who were experiencing severe financial hardships. Regrettably it was misused by way too many Americans who wanted to avoid paying their unsecured debts. They did not want to be held accountable for their actions. The credit card industry was fed up with this so they petitioned to have the bankruptcy 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 the majority of consumers to file for help. Bankruptcy should only be considered as your last resort option after you have considered every alternative method. Also you should contemplate the negative aftereffects that very well might come back later down the road. You would have to hire an attorney, go to court and that could run you a substantial amount of your hard earned income. There is also the negative effect of it being on your FICO history for a long time. When you sign any important application or document you by law have to answer yes when asked the question about bankruptcy, so this does have a long lasting effect on your ability to obtain future credit.
Credit counseling
Everywhere you look, either on TV or the radio, you will hear about credit counseling. A credit counseling firm will try to get the creditors to lower the interest on your credit cards. You then make one monthly installment to the consumer credit counseling firm and they then pay each one of your creditors for you. The downside to this method is even though they lower the APR on your credit card accounts you might still pay back as much as 130% of what you actually owe.
This is because with 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 seventy five percent of the debtors that are in these programs don’t finish the program for one reason or another. Another downfall 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 at once. They will also increase your interest back up and the creditor will not let you back on for a minimum of one year and sometimes even longer. This could put you right back to where you began, if not in a worse situation.
Credit Card Debt Negotiations (also known as debt settlement)
This is the avenue which can save you the most amount of money. Any good 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 consumer 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 sound like they have a magical button and are going to make all your debt vanish out of nowhere.
There are even some companies that try to use religion to obtain the trust of people. No matter what company you intend on hiring it is your responsibility to do research on them. You should start with the BBB (Better Business bureau). You should be able to discover quite a bit about a company from the BBB. If you see that a company has only been in settling debts for a little while and has a lot of complaints against them, then you know to stay away. Another thing to keep an eye out for is how much time has the company been in business. Some organizations only last one or two years before they go out of business or get caught stealing people’s money. Then some of them only stay around to make as much money as they can and close down just to open up across the streetusing a different name.
Steve Bis is a debt analyst with the US Consumer Advocate, which practices debt relief.