Hello my name is Steve Bis and I have been helping people that are in debt with their unsecured credit card debts for a quite some time and understand the effects it has on someone’s life. When you have credit card debt and believe that the situation is out of control, you should make a choice on what to do and make it ASAP. You do not want to wait until it is too late. As many of you already know is that the collectors are not polite when you contact them with issues with billing. It’s extremely fascinating the way it works because when you first obtain the card they are pretty nice people while you are speaking with them. Then if you call them to dispute a late or over limit charge and attempt to have it removed enough to try and maintain payments with 8% or even the 7.9 % interest that they are charging on your accounts. How are you suppose to afford the elevated payments now? It was cumbersome enough to manage before the interest skyrocketed. This is why many 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 debtors who were going through severe money problems. Regrettably it was misused by far too many U.S. citizens who were attempting to avoid paying their credit card debts. They did not want to be accountable for their actions. The credit card companies were fed up with this so they petitioned to have the bankruptcy legislation changed. It is now referred to as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. This would make it more difficult for many Americans to file for chapter 7 bankruptcy. Bankruptcy should only be considered as your last resort option after you have explored every alternative method. Also you should think of the negative aftereffects that could 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 your hard earned income. There is also the matter of it being on your FICO report for a long time. When you filling out any significant application or document you by law have to say yes when inquired about your previous bankruptcy, so this does have a long lasting effect on your ability to obtain future credit.

Debt Consolidation Credit Counseling

Everyway you look, either it is advertised on the radio or television, you will hear about consumer credit counseling. A credit counseling company will attempt to get the creditors to lower the APR on your credit cards. You then make one monthly payment to the consumer credit counseling company and they then make your payments to each one of your creditors for you. The downside to this method is even though they lower the interest on your credit card accounts you might still pay back as much as 135% of what you actually owe.

This is because with this kind of program 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 consumers that are in these programs don’t complete the program for missing as much as one payment. Another draw back to credit counseling is that if you have a money problem and are miss your monthly payment they will kick you off of the program immediately. They will also increase your interest back up and the creditor could keep you off the program for around one year and perhaps even longer. This might put you right back to where you started from, if not in a tougher situation.

Debt Negotiation (also known as debt settlement)

This is the method which can save you the greatest amount of money. A good standing debt settlement company will save you at least 40% of what you actually owe. The 40% should include all of their fees. Just like consumer credit counseling, you will hear a lot of radio and television ads quite often. These organizations are starting up everywhere across the United States. Some of these companies try to make it sound like they have a magic wand and are going to make all your debt disappear extremely easily.

There are also some companies that try to use religion to obtain the trust of people. Whatever organization you are speaking with it is your responsibility to do research on them. You should begin with the BBB (Better Business bureau). You might be able to find out a lot about a company from them. If you discover that a company has only been in business for a short time and has a lot of complaints towards them, then you know to stay away. Another thing to keep an eye out for is how long has the company been around. Some organizations only last a short time before they get shut down or get caught ripping people off. Then some of them only stay around to make as much as possible and close shop just to open up down the streetunder a new company name.

Steve Bis is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.

- Steve Bis