Credit card delinquencies are at an all time high. So much so that the government has stepped in to regulate credit card companies in order to help struggling consumers. Many people are turning to debt relief companies for help with their credit card debt but are making a bad situation worse by choosing the wrong company or even the wrong strategy to begin with.
There are safe and effective ways to deal with credit card debt. The process starts with choosing the right strategy. Each individual situation is going to be different. Choosing the right strategy starts with determining what result you are looking for. Do you need complete debt relief or can you afford to make some form of monthly payment? If you need complete debt relief, bankruptcy might be the way to go. If you can afford to make some form of monthly payment, then a debt management or debt settlement plan may be best for you.
Bankruptcy is a good option if you can file a chapter 7. In chapter 7, all of your unsecured debt gets discharged after all your assets are liquidated to pay creditors. This option is preferable if you do not have significant assets or equity in your home. If you do you might want to consider another option. If you have good income, it may be hard to get a chapter 7 and you may need to file a chapter 13. In chapter 13, you are forced into a repayment plan for all of your debts. If bankruptcy sounds right to you, contact an experienced attorney.
If you can afford a monthly payment then you may want to consider a debt management plan or a debt settlement company. This is where choosing the right company is crucial to your success in getting out of debt. Many people pay more in fees then they pay to their creditors and end up in worse shape then they were to begin with.
A debt management plan is sometimes offered as a debt consolidation plan. Keep in mind that these companies are not giving you a loan to pay off all your debt. They simply manage your debt payments for you and disburse your monthly payment to your creditors. They also charge a fee from each of your monthly payments. Debt management companies make an effort to negotiate better interest rates with your creditors but this is not guaranteed. It is important to check out customer reviews of any debt consolidation company your are considering.
The final method of debt relief, other than simply paying the debt back, is debt settlement. Debt settlement means settling the debt for a fraction of its value. Many companies offer to do this for you for a hefty fee. Most companies will charge you fifteen percent of the debt you are enrolling in the program. This practice actually leads to many failures for clients. If too much money is being collected to pay fees, there will be too little money left to make a reasonable settlement offer. Therefore it is preferable to find a company that charges you based on how much money they save you.
It is important to know that any credit card debt relief [http://www.debtinterventionservices.net] strategy you choose other than paying the debt in full will adversely affect you credit rating. Also, when you stop paying your creditors you will accumulate fees and interest charges. You can expect to receive a lot of collection calls from your creditors and collection agencies, which can be very stressful. It is important to weather this storm and stick to the strategy.
When choosing a debt relief program it is important to do a debt relief program review. Check out the number of customer complaints and the type of complaints the company is receiving. This is the best measure of a good debt relief firm. Successful debt relief programs will have few, if any complaints. There are some good companies out there. Better Business Bureau Ratings are not the best way to test a company.
