Eliminating Credit Card Debt - If You Are Not Doing It Yourself, Debt Settlement Costs Too Much
We have all heard the radio advertisements for debt settlement firms promising to eliminate credit card debt. Unfortunately for the people that hire them, these companies do a much better job of selling their services than they do the job of delivering those promised results.
A typical consumer in debt cannot afford to pay for debt settlement services AND settle their credit card debts with what is left over. It would cost $2250-3000 to settle some reduction of $15,000 in debt. Debt settlement firms advise you stop paying the credit card companies and to start paying them instead. They take their fees out then wait for enough money to accumulate to make lump-sum payments to the consumer’s credit card banks. But, that typically will not happen until after those debts have been charged off and sold due to non-payment.
According to MSNBC, settlement firms often promise more than they can actually deliver. They keep their fee whether or not a settlement agreement is achieved.
Due to Federal Reserve regulations, credit card companies write off their bad debts after six months. The difficulty is if an indebted consumer cannot save enough money with the debt settlement firm to settle the debt within six months, then they could be faced with bad credit, collection agencies and lawsuits.
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.
Matt Highlander writes about the many strategies for eliminating credit card debt; some for those who can pay, some for those who cannot pay. Read all about them in the 230-page Credit Card Debt Survival Guide
