Your health can be affected by massive amounts of credit card debt

June 24th, 2008

My name is Steve Bis and I am assisting those that are in debt with their credit cards for a while now and understand the effects it has on someone’s life. When you have credit card debt and believe that the situation is no longer something you can control, you need to make a decision and make it ASAP. You do not want to procrastinate until it is too late. As the majority of you already know is that the debt collectors are not polite when you call them with complaints regarding you statement. It’s pretty exciting the way it works because when you initially get the card they are pretty nice people on the phone. Then if you call them to dispute a past due or over limit penalty fee and try 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 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 give you a little information on them.

Bankruptcy

Before 2005 bankruptcy was to be used for people who were experiencing serious money troubles. Sadly it was mistreated by way too many Americans who were trying to evade paying their debts. They did not want to be held accountable for their misgivings. The credit card industry was fed up with this so they pushed to have the laws changed. It is now known as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. It would make it harder for the majority of debtors to file for bankruptcy. Bankruptcy should only be used as your very last choice after you have tried every other debt relief method. Also you should contemplate the consequences that might come back later down the road. You would have to hire an attorney, go to court and that would cost you a substantial amount of money. There is also the matter of it being on your credit history for a long time. When you sign any important application or document you will always have to answer yes when inquired about your previous bankruptcy, so this does have a very negative long lasting effect on your ability to obtain future credit.

Consumer Credit Counseling

In each direction you turn, either it is advertised on the radio or television, you will hear about credit counseling. A credit counseling organization will try to get the credit card companies to reduce the APR on your credit accounts. You then make one monthly installment to the consumer credit counseling organization and they then pay each one of your creditors for you. The drawback to this method is even though they reduce the APR on your credit card accounts you could still pay back as much as 135% of what you actually owe.

This is because on 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 consumers that are in these programs don’t graduate from 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 boot you out of the program immediately. They will also increase your interest back up and the creditor could keep you off the program for at least one year and sometimes even longer. This might put you right back to where you began, if not in a worse predicament.

Credit Card Debt Negotiation (also known as debt settlement)

This is the option which can save you the most amount of money. A reputable debt settlement company will save you at least 40% of what you are said to have to payback. The 40% should include all of their fees. Similar to consumer credit counseling, you will hear a lot of radio and television ads very frequently. These organizations are starting up everywhere across our beloved country. Some of these companies try to make it seem like they have a magical button and are going to make all your debt vanish instantly.

There are even some companies that try to use religion to gain the trust of debtors. No matter what organization you are speaking with it is your responsibility to do research on them. You can always begin with the BBB (Better Business bureau). You may be able to find out quite a bit about a company from them. If you soon realize that a company has only been in operating for a short time and has a plethora of complaints against them, then you must stay away. One more thing to keep an eye out for is how much time has the company been in business. Some organizations only make it one or two years before they get shut down or get caught stealing people’s hard earned dollars. Then some of them only stick around to make as much money as they can and close shop just to open up across the streetafternoon.

Debt settlement has been a breath of fresh air for many who were otherwise stuck on the neverending credit card debt treadmill.