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The Ins and Outs of Credit Card Debt
Settlement |
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by: Kevin
Erickson |
Are you a self-confessed
shopaholic who buys anything and everything that you get your
shopping addicted hands on? Such thoughtless and impulsive buying
will most likely result in the accumulation of a bunch of junk that
will simply collect dust. Can you even remember that silk scarf you
just had to have and since it was a virtual steal at 50% off you
just had to buy it? Where is it now and how many times have you
actually worn it? Is it still fashionable?
If you're like
most people, chances are you'll have to rummage through bins and
bins of collected shopping "litter" which you've accumulated through
the years, just to be able to see that once precious scarf. You may
still be in a state of denial by saying "Fashion goes round and
round and that scarf will have its shining moment once again."
Unfortunately, many people fall into this mode of impulsive
buying that they really can't afford and before they realize it they
become saddled with debt. If you fall into this category, you'll
soon need to learn a thing or two about debt settlement which can
assist you in extracting yourself out of that self-imposed state of
financial trauma and begin to start rebuilding your life bit by bit.
And the time to start is now! Of course, you have to be honest with
yourself, admit that you've got a serious debt problem and then
humble yourself enough to seek the help you need to pull yourself
out of this devastating ordeal.
First things first, a lot of
people may actually think that they only have a few choices when it
comes to solving their debt problems. The two most common options
for those who are burdened with enormous amounts of debt are either
to consider declaring bankruptcy or debt consolidation.
Unfortunately, if you take the easy way out by declaring bankruptcy,
it will leave an embarrassing and indelible mark on your credit
report for up to 7 years, which will result in higher interest
rates, less credit and if you try do qualify for a mortgage (some
lenders do give loans immediately after bankruptcy) you will most
likely not be able to get a loan to cover 100% of the financing you
need. Normally, an 80% first mortgage and if you can get a second
mortgage, it will be at much higher interest rate and probably only
10% of the loan value for a total of 90% of the loan to value and
you'll have to come up with 10% down.
Clearly, everything
will come with a higher price for a period of time but you'll have
to weigh that with a straight debt consolidation solution in which
you pay off your debt. However, in many cases you can negotiate with
the collection agency and it's realistic to get 25% - 50% of the
debt forgiven, if you can show that you'll continue to make monthly
payments until the remainder is paid off.
Many of the debt
settlement / debt consolidation companies were actually established
by the credit card companies themselves. Why, you ask... because it
only makes sense for the credit card companies to help you pay off
your debt because they can either forgive some of the debt or reduce
the interest rates, lower the monthly minimum payment requirements
or some combination and get paid a portion of the money owed or
receive nothing if you declare bankruptcy. What would you do if you
were in their shoes? The answer is obvious. This is why a lot of
people who have been saddled with debt are now being offered debt
settlement. Of course, not all debt consolidation service companies
are owned by credit card companies but many are.
Some groups
offer debt settlement programs through arbitration. The "selling
point" when it comes to these kinds of solutions is that debt
settlement will actually help end your debt problems, without having
to go through declaring bankruptcy, without having to pay
overcharged debt consolidation program fees as well as helping you
avoid getting caught in the debt consolidation trap that a lot of
people have fallen victim to.
In many cases, what the
organizations do that offer debt settlement services is negotiate
your debt down with the collection agencies that have been given
your case. I would encourage you to contact a number of companies to
ensure you feel comfortable and that you are working with a quality
company that doesn't over-charge you for their services.
On
the other hand,if you would really like to save money, which only
makes sense since you are already heavily in debt... then negotiate
with the collection agency yourself. It's not difficult, rather than
getting upset when you get called night after night simply tell the
collection agency rep that you would like to pay off your debt but
you can only do it if you can get it reduced and then ask them that
you would like to get the debt you owe reduced by 50% - 60%, even
75% and ask them to see what they can do. Ask for a lot up front
because as in any negotiation there's always a give and take.
Believe me, they will go to work for you and your offer will be
seriously considered because they only get paid when they collect
and it's better to get their percentage on a smaller amount than
"diddly squat" on the full amount.
Of course, you'll have to
decide what route you want to take... bankruptcy versus debt
settlement but shop around and realize that you do have options. The
internet is full of companies offering their bankruptcy or debt
settlement services, but be careful and don't let them push you
around and never work with anyone you don't feel 100 percent
comfortable with.
About the author:
Kevin Erickson is a
contributing writer to the following websites: http://www.aneyeondebt.com/and http://www.debtmergeresources.com/.This article
may be reproduced only in its entirety.
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