If you are one of the unfortunate individuals who have been struggling to meet your consumer debt obligations, there is a good chance you have been seeking solutions to your financial problems. If so, you have undoubtedly discovered the worse the debt situation gets, the more difficult it is to find relief.
Solutions for Desperate Situations
According to the US Bankruptcy Court system, 2.2 million individuals filed for bankruptcy over the two-year period ended October 31, 2014. Bankruptcy is the ultimate solution for severe consumer debt issues. If you have an average American household, you might be carrying $15,611 in credit card debt (Federal Reserve Survey, 2014), mortgage debt, a car loan and student loans. Depending on your income, you might also be getting close to seeking desperate measures to solve your problems. Before you start thinking about bankruptcy, you might want to consider the consequences, including 7-10 years of bad credit. As an alternative, you might have heard the term “debt settlement” and be wondering if it’s a viable option for relieving severe consumer debt issues.
Credit Card Debt Settlement – Fact or Fiction?
If you are curious about debt settlement, here is some information you might find interesting. Credit card debt settlement is a real and viable solution for people who find themselves stuck behind the eight-ball with unmanageable debt. It’s a fact, not fiction. However, the debt settlement process does come with consequences to go along with the benefits derived.
What is Debt Settlement
When a credit card borrower is no longer able to maintain regular payments, it is possible to approach your credit card companies about the possibility of renegotiating the debt balance as well as some of the key terms. You can initiate this process on your own, but it’s a far better option to work through a licensed debt management company that has experience dealing with such sensitive matters. If the negotiations are successful, there’s a strong possibility your debt will be deeply discounted, your effective interest rates lowered and lower monthly payments established. All of these adjustments would be based on your promise to resume regular payments on a timely basis. As mentioned, there are consequences. The biggest one would be the damage done to your credit score. It won’t be as severe as the damage caused by bankruptcy, but you best be prepared for 2-3 years of bad credit.
What About the Lenders?
It goes without saying lenders are never pleased about the debt settlement process. However, most lenders are run by astute business people who are able to understand the realities of the situation. If they refuse to negotiate, it might lead you to bankruptcy. Through the bankruptcy process, they might stand to get nothing in the settlement unless they are willing to incur excessive legal expenses for a fight. From a business standpoint, it makes sense to settle for what they can reasonably get through the debt settlement process.
Complicated debt settlement negotiations are best handled by professional debt counselors with the requisite experience. If you would like to discuss these or other matters with our counselors here at Rescue One Financial, they would be glad guide you through the process, which will help give you a new start and a chance to rebuild your credit score.