« Money Management Tips - What Students Need To Know Before Applying For A Student Credit Card | Main | Capital One Application - Take the Hassle Out of Credit »
What Is Debt Settlement And How Can It Assist You
By Credit Watcher | February 22, 2008
Credit card debt has become a major problem for more American families now then ever before in the history of credit. In 2006 American consumers paid over 17 billion dollars in controversial penalty fees alone, besides the billions paid through high APR. At this point consumer credit card debt has climbed well over 1 trillion and keeps going up. With the reform in bankruptcy laws in 2005 many debtors now have a much more narrow amount of options to how to climb out of the ocean of debt.
For many denial is the state of mind that they are in until it’s too late. Most people do not believe they have credit problems until they look over their shoulder at a volcano of debt ready to explode. These debtors feel that because they have been on time with their monthly minimum payments that they have perfect credit. When in actuality having huge amounts of credit card debts that are almost maxed out has a significant negative effect on obtaining any future credit.
The real problem lies within the credit card company’s minimum payment scheme. This payment scheme is meant to have the debtor trapped in debt for at least 38 years, and that’s with a average interest rate. Now raise the interest to the default rate and these debtors would be paying these debts for the rest of their lives. And will have paid well over 10 times the amount of the original balance in interest alone. A debtor really should learn more about the various options of credit card debt reduction.
It isn’t all bad news though for the American consumer there are options to get credit relief, but they are limited to only a few. The first option many contemplate is CCCS otherwise known as debt consolidation. With this system of credit card debt relief the benefits a consumer will have are to consolidate into one monthly payment and to have interest rates lowered. Another very lucrative method is also debt settlement. Through debt settlement the debtor has a company negotiate on the credit card accounts to have the actual balance owed to be reduced. The primary advantage of debt settlement is the savings of money. Plus the enormous savings of time, most debtors can foresee becoming debt free within two years.
Any method above would be far better than just continuing to stay on the credit treadmill. The credit treadmill is the vicious cycle of minimum payments that was described above. Anything is better than losing tens of thousands of dollars and decades of your life to cumbersome debts.
Topics: Consolidating Debt |