| Eliminating Credit Card Debt - If You Are Not Doing It Yourself, Debt Settlement Costs Too Much |
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| Written by Matthew Highlander |
| Sunday, 13 December 2009 20:17 |
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There are so many debt settlement firms advertising their services that we take their claims for granted. Sadly, when they promise to eliminate credit card debt, they deliver little or nothing for the money they have collected from already stretched consumers.
There are so many debt settlement firms advertising their services that we take their claims for granted. Sadly, when they promise to eliminate credit card debt, they deliver little or nothing for the money they have collected from already stretched consumers. Debt settlement firms charge too much for their services for the average consumer debtor to be able to afford to pay off a reduced-balance credit card debt before it charges off and is sold. They want $1800-2400 to settle $12,000 of debt. And they want to be paid first! They advise you to stop making credit card payments and to pay them instead, saving money in their account for an eventual settlement. According to the New York Times, creditors will not negotiate reduced balances with consumers who are still making monthly payments and balances on credit cards with missed payments swell with interest and fees. The Wall Street Journal reported that some major creditors, including American Express Co., say they won't even work with debt-settlement companies. Yet, debt settlement firm's fees are all non-refundable. The problem is most banks charge off credit card debt after six months of non-payment. If you cannot save enough money within six months of starting the program, then your credit card debts could charge off, leaving a seven year negative mark on your credit report. With a charge off and subsequent sale to a junk debt buyer there is no more leverage with the original creditor, the credit card bank, to negotiate away a negative credit report listing. After the charge off of bad debts the credit card banks sell large blocks of those debts to junk debt buyers for around 10 cents on the dollar. The buyers of this junk debt will then attempt to collect on these credit card debt(s). It is better for the consumer to demand the return of their money and to use consumer protection laws like the Fair Debt Collection Practices Act to fend off, rather than attempt to settle with these scavengers, according to the Credit Card Debt Survival Guide. Consumers should attempt lump-sum debt settlement as a means of eliminating credit card debt on their own rather than through a debt settlement firm promising too much. But, they must be ready to present a strong need-based case to their credit card companies, according to the Credit Card Debt Survival Guide. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Matt Highlander spent months researching strategies for credit card debt relief. Read the complete 230-page Credit Card Debt Survival Guide |