Hello my name is Joe Sellers and I have been working with people that are in arrears with their credit cards for a long time and understand the effects it has on their lives. When you have credit card debt and think that this matter is no longer something you can control, you should make a choice on what to do and make it ASAP. You should not put it off until it is too late. As the majority of you already know is that the debt collectors are not polite when you contact them with problems regarding your statements. It’s pretty exciting the way it works because when you initially get the card they are pretty nice people when you call. Then if you call them to complain about a late or over limit penalty fee and attempt to have it reversed 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 supposed to come up with the money for the new payments now? It was cumbersome enough to manage before the interest was raised. This is why many Americans are seeking out other options such as credit card debt settlement vs. credit counseling, or bankruptcy. If you do not know much about these options then I will give you a little information on them.

Bankruptcy

Up until late 2004 bankruptcy was to be used for people who were fighting through severe monetary problems. Sadly it was misused by tens of thousands of debtors who wanted to avoid paying their credit card debts. They did not want to be held accountable for their misgivings. The credit card industry was sick and tired of 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 many Americans to file for bankruptcy. Bankruptcy should only be considered as your very last choice after you have tried every conceivable method. Also you should contemplate the negative aftereffects that might come back later on down the road. You would have to hire an attorney, go to court and that would run you a substantial amount of money. There is also the negative effect of it being on your FICO report for a long time. When you are signing any important application or document you by law have to say yes when asked the question about bankruptcy, so this does have an extremely long lasting effect on your ability to obtain future credit.

Consumer Credit Counseling

No matter where you look, either on TV or the radio, you will see and hear about consumer credit counseling. A credit counseling organization will attempt to get the creditors to reduce the interest rate on your credit cards. You then make one monthly installment to the credit counseling organization and they then pay each one of your creditors for you. The down fall to this choice is even though they reduce the APR on your credit card balances you very well may still pay back as much as 140% 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 consumers that are in credit counseling don’t finish the program for one reason or another. Another downfall to credit counseling is that if you have an income problem and are short on your monthly payment they will kick you out of the program instantly. They will also raise your interest back up and the creditors will not let you back on for around one year and perhaps even longer. This could put you right back to where you began, if not in a tougher situation.

Debt Settlement

This is the option which can save you the greatest amount of money. Good debt settlement companies will save you at least 40% of what you owe. The 40% should include all the fees as well. Similar to credit counseling, you will hear a lot of radio and television ads quite often. These companies are opening up all across the United States. Some of these companies try to make it appear like they have a magical wand and are going to make all your debt disappear instantly.

There are also many companies that try to use religion to gain the trust of debtors. Whichever organization you are speaking with it is your responsibility to do research on them. You can always start with the BBB (Better Business bureau). You may be able to discover a lot about a company from the Better Business Bureau. If you find out that a company has only been in operating for a short time and has a lot of complaints towards them, then you must avoid them. Another thing to look for is how much time has the company been in business. Some companies only survive a couple of 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 down the street under a new name and new numbers. I hope this has been helpful in learning your options. Have a good day

Joe Sellers is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt reduction.