Find the right path to being debt free

June 30th, 2008

My name is Steve Bis and I have been helping consumers that are in debt with their credit cards for a while and know the effect it has on their lives. When you have credit card debt and believe that the situation is no longer in your hands, you need to make a choice on what to do and make it ASAP. You should not wait until it is too late. As plenty of you bye now already know is that the debt collectors are not very easy to deal with when you call them with complaints with billing. It’s extremely interesting the way it works because when you initially get the card they are the politest people while you are on the phone. Then if you contact them to argue against a past due or over limit penalty fee and attempt to have it removed 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 come up with the money for the elevated payments now? It was dreadful enough to manage before the interest skyrocketed. This is exactly why U.S. citizens are seeking out 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 bit of an education on them.

Bankruptcy

Before 2005 bankruptcy was to be used for consumers who were having severe money problems. Regrettably it was mistreated by thousands of U.S. citizens who were attempting to evade paying their debts. They did not want to take responsibility for their actions. The credit card companies were sick and tired of this so they petitioned to have the bankruptcy 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 Americans to file for bankruptcy. Bankruptcy should only be exercised as your last resort option after you have considered every other debt relief method. Also you should understand the negative aftereffects that could come back later down the road. You would have to hire a lawyer, go to court and that could run you a lot of your hard earned income. There is also the matter of it being on your FICO history anywhere from 7 to 10 years. 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 credit.

Consumer Credit Counseling

Everyway you turn, either on TV or the radio, you will hear about consumer credit counseling. A credit counseling organization will attempt to get the credit card companies to reduce the interest rate on your credit cards. You then make one monthly payment to the credit counseling organization and they then make your payments to each one of your creditors for you. The drawback to this option is even though they reduce the interest rate on your credit card accounts you might still pay back as much as 140% of what you currently owe.

This is because joining this kind of plan you will still be paying back what the full original balance was plus some of the interest for around possibly five years or more. Almost 75% of the people that are in these programs don’t finish the program for missing as much as one payment. Another draw back to credit counseling is that if you have a income problem and are cannot make your monthly payment they will boot you off of the program instantly. They will also raise your interest back up and the creditor will not let you back on for at least one year and perhaps even longer. This will put you right back to where you began, if not in a worse predicament.

Credit Card Debt Negotiation Texas (also known as debt settlement)

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 are said to have to payback. The 40% should include all the fees as well. Just as with credit counseling, you will hear a lot of radio and television ads very frequently. These organizations are opening up all across the United States. Some of these companies try to make it appear like they have a magic bullet and are going to make all your debt vanish out of nowhere.

There are even some companies that try to use religion to attain the trust of debtors. Whichever organization you are speaking to it is your responsibility to due diligence on them. You can always begin with the BBB (Better Business bureau). You will be able to find out quite a bit about a company from the BBB. If you soon realize that a company has only been in business for a little while and has a lot of complaints towards them, then you must avoid them. One more thing to keep an eye out for is how much time has the company been around. Some organizations only survive a short time before they get terminated or get caught ripping people off. Then some of them only stick around to make as much money as they can and close down just to open up right next doorunder a new name.