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The Ins
and Outs Of Credit Card Debt Settlement
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by:
Kevin Erickson
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Are you a self-confessed shopaholic who buys
anything and everything that you get your shopping addicted hands on?
Such thoughtless and impulsive buying will most likely result in the
accumulation of a bunch of junk that will simply collect dust. Can you
even remember that silk scarf you just had to have and since it was a
virtual steal at 50% off you just had to buy it? Where is it now and
how many times have you actually worn it? Is it still fashionable?
If you're like most people, chances are you'll have to rummage through
bins and bins of collected shopping "litter" which you've accumulated
through the years, just to be able to see that once precious scarf. You
may still be in a state of denial by saying "Fashion goes round and
round and that scarf will have its shining moment once again."
Unfortunately, many people fall into this mode of impulsive buying that
they really can't afford and before they realize it they become saddled
with debt. If you fall into this category, you'll soon need to learn a
thing or two about debt settlement which can assist you in extracting
yourself out of that self-imposed state of financial trauma and begin
to start rebuilding your life bit by bit. And the time to start is now!
Of course, you have to be honest with yourself, admit that you've got a
serious debt problem and then humble yourself enough to seek the help
you need to pull yourself out of this devastating ordeal.
First things first, a lot of people may actually think that they only
have a few choices when it comes to solving their debt problems. The
two most common options for those who are burdened with enormous
amounts of debt are either to consider declaring bankruptcy or debt
consolidation. Unfortunately, if you take the easy way out by declaring
bankruptcy, it will leave an embarrassing and indelible mark on your
credit report for up to 7 years, which will result in higher interest
rates, less credit and if you try do qualify for a mortgage (some
lenders do give loans immediately after bankruptcy) you will most
likely not be able to get a loan to cover 100% of the financing you
need. Normally, an 80% first mortgage and if you can get a second
mortgage, it will be at much higher interest rate and probably only 10%
of the loan value for a total of 90% of the loan to value and you'll
have to come up with 10% down.
Clearly, everything will come with a higher price for a period of time
but you'll have to weigh that with a straight debt consolidation
solution in which you pay off your debt. However, in many cases you can
negotiate with the collection agency and it's realistic to get 25% -
50% of the debt forgiven, if you can show that you'll continue to make
monthly payments until the remainder is paid off.
Many of the debt settlement / debt consolidation companies were
actually established by the credit card companies themselves. Why, you
ask... because it only makes sense for the credit card companies to
help you pay off your debt because they can either forgive some of the
debt or reduce the interest rates, lower the monthly minimum payment
requirements or some combination and get paid a portion of the money
owed or receive nothing if you declare bankruptcy. What would you do if
you were in their shoes? The answer is obvious. This is why a lot of
people who have been saddled with debt are now being offered debt
settlement. Of course, not all debt consolidation service companies are
owned by credit card companies but many are.
Some groups offer debt settlement programs through arbitration. The
"selling point" when it comes to these kinds of solutions is that debt
settlement will actually help end your debt problems, without having to
go through declaring bankruptcy, without having to pay overcharged debt
consolidation program fees as well as helping you avoid getting caught
in the debt consolidation trap that a lot of people have fallen victim
to.
In many cases, what the organizations do that offer debt settlement
services is negotiate your debt down with the collection agencies that
have been given your case. I would encourage you to contact a number of
companies to ensure you feel comfortable and that you are working with
a quality company that doesn't over-charge you for their services.
On the other hand,if you would really like to save money, which only
makes sense since you are already heavily in debt... then negotiate
with the collection agency yourself. It's not difficult, rather than
getting upset when you get called night after night simply tell the
collection agency rep that you would like to pay off your debt but you
can only do it if you can get it reduced and then ask them that you
would like to get the debt you owe reduced by 50% - 60%, even 75% and
ask them to see what they can do. Ask for a lot up front because as in
any negotiation there's always a give and take. Believe me, they will
go to work for you and your offer will be seriously considered because
they only get paid when they collect and it's better to get their
percentage on a smaller amount than "diddly squat" on the full amount.
Of course, you'll have to decide what route you want to take...
bankruptcy versus debt settlement but shop around and realize that you
do have options. The internet is full of companies offering their
bankruptcy or debt settlement services, but be careful and don't let
them push you around and never work with anyone you don't feel 100
percent comfortable with.
About the author:
Kevin Erickson is a contributing writer to the following websites: http://www.aneyeondebt.com/and http://www.debtmergeresources.com/.This
article may be reproduced only in its entirety.
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