Legal Debt Settlement Options

First, let me just say that consumers across the country have been severely beaten down by their creditors for many years.  A vast majority of American consumers can barely keep up with their minimum monthly payments on their credit card accounts, this is mainly due to the extremely high interest rates that they are forced into paying.  Credit card companies (divisions of Banks) target consumers with persuasive offers to spend and borrow.  More often than not, the Banks will lure consumers in with 0% or low A.P.R. offers for the first year in an effort to trap them into a vicious, repetitive, never ending cycle of financial hardship.

The Credit Card companies have structured their business models in such a way that they can get a way with this abuse.  Some consumers believe that it’s not the Bank or Creditor’s fault that people get into trouble, others will argue that indeed it is the abusive nature by which the creditors operate that poses this threat upon Americans.  We live in a materialistic society that endorses spending, therefore creating more of an opportunity for credit card companies to capitalize on consumer spending.  This fact will forever remain, which is why the Government is finally trying to do something about it.

Unfortunately for most, the effects of increased credit card regulation will NOT help American consumers of today.  It will only help and prevent future Predatory lending practices from taking place years from now.  We must ask ourselves, what can Americans do now to resolve their debt burden?  What can a consumer do that is suffering from double digit interest rate A.P.R. and high balances that have crept up on them so quickly?

In the following paragraphs, I’ll begin to explain the various options in an effort to help the consumer better understand the options that may be available to them.  Please note: This is not to be received as legal/financial advice in anyway or form.

Debt Freedom will clearly define potential options that may be available to them.  It’s important to realize that consumers must speak with a Debt Counselor to determine which option is most suitable for their situation.

If a consumer is currently carrying $7,500 or more in credit card debt (unsecured debt) and cannot make the high payments going forward they may seek the following options:

- Consumer Credit Counseling (CCCS)
- Bankruptcy
- Home Equity Line of Credit (HELOC)
- Legal Debt Negotiation/Settlement (Consumer Law Program)

Most consumers having difficulty will try and communicate with their creditors in an effort to work something out.  This method is a complete waste of time and the consumer ends up being placed into a hardship program which makes their balances grow even larger.  If they don’t offer that then they may refer the client to Consumer Credit Counseling, this is a program that was created by the Banks for the Banks.

They basically consolidate all account balances into one and the consumer pays back 100% of the amount owed plus consolidated interest.  This all sounds pretty good in theory right?  Wrong!  This program normally takes 5 – 7 years to complete, you barely save very little monthly and will have a very difficult time qualifying for other credit during the long term duration of the program.  It will be viewed as if you’re in a Chapter 13 Bankruptcy from a credit underwriter’s position.

The next option is Bankruptcy, if you are Self Employed then this would be a disaster.  It will take you 7 – 10 years to recover and you will have a difficult time qualifying for future credit needed for business.  It has also become more difficult to qualify for since the changes in the Bankruptcy Law in 2005. Not to mention, that this will have a long lasting negative adverse effect on your consumer credit for 10 years!  This is really an option of last resort for both self employed and W-2 wage earners.

Then you have the option of borrowing against your home.  As many of you may already know, most homeowners in America do NOT have any equity in there home to borrow from and for the sake of argument let’s say that they did, due to the increased tightening of “credit” they will most likely be denied due to high debt to income ratio.  Also, if a consumer could get approved for a HELOC for debt consolidation usage, would it make any sense at all to attach credit card debt as a “Lien” against their property…most would say not.

Last but certainly not least is Debt Negotiation -Debt Settlement.  This where the consumer retains the services of a third party company or Law firm to deal directly with their creditors on their behalf in an effort to negotiate the debt owed.

This service is best done by attorneys who have extensive industry knowledge, experience and education in the practice of debt validation, debt negotiation, and debt settlement.  Generally speaking, attorneys can negotiate balances down by 40 – 60% in most cases and prevent harassing collection calls during the process.

Also, keep in mind that attorneys are taken far more seriously than non-attorney companies when negotiating with creditors.  Only an attorney can offer and provide certain protections to a consumer during this course of action, where a non-attorney company cannot.

Please also note: that a legitimate firm will guarantee certain protections in writing.  This alternative option is by far the most aggressive, quickest, reliable, stress relieving and cost savings approach to eliminating your debt in the shortest period of time!  A credible firm should be able to enroll a consumer by NOT charging them an up front set up/enrollment fee.

In conclusion, this is a real opportunity that has been proven over the years for consumers to retain licensed professionals that will represent them and handle their unsecured debt reduction needs.  There is no better time to start saving money!  It’s time to put a stop to your financial hardship.  

Source: Debt Freedom

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