Important information you should know when dealing with credit card debt
Posted on June 17, 2008
My name are Steve Bis and I’ve been assisting people that are in debt with their credit cards for a while and understand the stress it causes on a family. When you have credit card debt and know that the situation is out of control, you should make a choice fast. You don’t want to procrastinate until it is too late. As the majority of you must already know that the creditors are not co-operative when you contact them with complaints with billing. It’s pretty remarkable the way it works because when you initially obtain the card they are pretty nice people when you talk to them. Then if you contact them to argue against a past due or over limit charge and attempt to have it removed , they may let you off once a year, if that agent is in a pleasant mood. When it comes down to it what decision are you going to make. It’s not like you can discontinue making payments on your residence or other secured debts for you and your loved ones to survive with your day to day living expenses.
The credit card industry made a chilling 17 billion dollars in over limit and late fees in 2006 and it will be significantly higher this year. Now I am pretty sure that it has happened to you, where you’ve gone and open your credit card bill only to find out that your interest has just about doubled in some cases tripled. It is bad enough to try and maintain payments with 10% or even the 7.9 % interest that they are charging on your credit cards. How are you suppose to pay for the elevated payments now? It was challenging enough to manage before the interest was raised. This is the reason 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 an education on them.
Consumer Bankruptcy
Prior to 2005 bankruptcy was to be used for individuals who were fighting through serious financial troubles. Regrettably it was misused by far too many Americans who were trying to evade paying their credit card debts. They did not want to take responsibility for their misgivings. The credit card companies were fed up with this so they petitioned to have the laws updated. It is now referred to as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. This would make it harder for the majority of Americans to file for chapter 7 bankruptcy. Bankruptcy should only be exercised as your last resort option after you have tried every conceivable option. Also you should understand the consequences that could come back later on down the road. You would have to find a lawyer, go to court and that would run you a lot of your hard earned income. There is also the matter of it being on your FICO report anywhere from 7 to 10 years. When you filling out any important application or document you will always have to say yes when asked the question about bankruptcy, so this does have a long lasting effect on your ability to obtain future credit.
Debt Consolidation Credit Counseling
Everywhere you turn, either on TV or the radio, you will hear about credit counseling. A credit counseling company will attempt to get the creditors to lower the interest 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 on your behalf. The fallback to this choice is even though they lower your interest charge on your credit card accounts you might 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 4 to 7 years. Almost seventy five percent of the people that are in credit counseling don’t graduate from the program for missing as much as one payment. Another problem to credit counseling is that if you have a income problem and are short on your monthly payment they will kick you off of the program right away. They will also bump up your interest back up and the creditors will not let you back on for around one year and on some occasions even longer. This might put you right back to where you began, if not in a worse situation.
This is the method which can save you the most amount of money. A competent debt settlement company will save you at least 40% of what you owe. The 40% should include all of their fees. As with consumer credit counseling, you will hear a lot of TV and radio ads very frequently. These organizations are opening up everywhere across the United States. Some of these companies try to make it appear like they have a magic button and are going to make all your debt disappear easily with little effort.
There are also some companies that try to use religion to obtain the trust of debtors. Whichever organization you are going to use it is your responsibility to due diligence on them. You can always begin 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 settling debts for a little while and has a lot of complaints towards them, then you must stay away. Another thing to keep an eye out for is how much time has the company been around. Some organizations only make it one or two years before they go out of business or get caught with their paws in the cookie jar. Then some of them only stay around to make as much money as they can and close down just to open up down the streetwith a different name] and will continue to do this until they decide it is time to stop.
You need to feel secure with the individual you are speaking with as well as the debt settlement organization. If they are very pushy and trying to get you to sign a document within the first few minutes of the call you need to be very careful. This is not a financial decision you want to jump into head first. Really, how can a company be sure they can help you out without reviewing your statements first? There are way too many organizations out there that only tell you all the positive things about their program. They tell you not to fret anything. This is a extremely easy procedure and nothing bad will ever happen to you. That is a load of you know what. It is not a extremely easy procedure and it is not the best choice for every debtor. Some debtors still get taken by them because that company sugar coated everything and did not offer them full disclosure. For a lot of debtors credit card settlement can really get you back on track and out of debt in under three years, while saving you thousands of dollars off your current balance.
Another thing to think about is a majority companies make all their charges within the first year and a half of the the program. Now I will ask you this question, what reason will that company have to work out the best possible settlement on your behalf if they know that they are’nt going to make any more money from you? There is none! So you see, if an organization understands that why would they keep working on trying to get you a better settlement. This happens very frequently. They really could care less at that point. They take whatever your creditors’ offer, which means you pay more. You need to search out a company that earns its charges the old fashion way, by earning it. Make sure they answer all your debt settlement inquries. I hope this has given you a good understanding of the various choices you have to becoming debt free. Thanks and have a good night.
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