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This article will help you with going over your choices and learn what you can do when you’re drowning in a sea of debt.

Hello my name is Steve Bis and I am working with people that are in arrears with their unsecured credit card debts for a while and understand the negative effects it has on people’s lives. When you have credit card debt and think that this matter is no longer something you can control, you must make a choice on what to do and make it as soon as you can. You don’t want to put it off until it is too late. As plenty of you already know is that the collectors are not co-operative when you call them with issues with your bill. It’s extremely interesting the way it works because when you first get the card they are the politest people while you are on the phone with them. Then if you call them to complain about a past due or over limit penalty fee and try to have it removed enough trying to keep up with 10% or even the 7.9 % interest that they are charging on your credit cards. How are you suppose to afford the new payments now? It was cumbersome enough to manage before the interest was raised. This is the reason U.S. consumers are seeking out other options such as debt settlement vs. credit counseling, or bankruptcy. If you do not know much about these options then I will give you a little information on them.

Consumer Bankruptcy

Prior to 2005 bankruptcy was to be used for people who were fighting through serious money problems. Unfortunately it was mistreated by far too many people who wanted to avoid paying their credit card debts. They didn’t want to take responsibility for their actions. The credit card companies were sick and tired of this so they lobbied to have the bankruptcy legislation updated. It is now referred to as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. This would make it more difficult for most debtors to file for bankruptcy. Bankruptcy should only be made use of as your very last choice after you have explored every alternative option. Also you should contemplate the consequences that will come back later down the road. You would have to locate a lawyer, go to court and that could cost you a lot of money. There is also the issue of it being on your credit report anywhere from 7 to 10 years. When you sign any important application or document you will always have to say yes when inquired about your previous bankruptcy, so this does have a long lasting effect on your credit.

Credit counseling

Everyway you look, either on TV or the radio, you will hear about consumer credit counseling. A credit counseling organization will try to get the credit card companies to lower the APR on your credit accounts. You then make one monthly payment to the consumer credit counseling organization and they then pay each one of your creditors for you. The fallback to this option is even though they lower the interest rate on your credit card accounts you very well may still pay back as much as 120% of what you actually owe.

This is because joining this kind of program you will still be paying back what the full original balance was plus some of the interest for around possibly five years or more. Almost 50% of the people that are in these programs don’t complete the program for one reason or another. Another draw back to credit counseling is that if you have a cash flow problem and are short on your monthly payment they will kick you off of the program right away. They will also bump up your interest back up and the creditor will not let you back on for around one year and on some occasions even longer. This could put you right back to where you began, if not in a worse situation.

Debt Negotiation (also known as debt settlement)

This is the avenue which can save you the greatest amount of money. A ethical debt settlement company will save you at least 40% of what you owe. The 40% should cover all of their fees. Just as with consumer credit counseling, you will hear a lot of radio and television ads very frequently. These companies are popping up all across America. Some of these companies try to make it sound like they have a magic wand and are going to make all your debt disappear instantly.

There are even many companies that try to use religion to gain the trust of consumers. Whatever organization you are speaking with it is your responsibility to due diligence on them. You should begin with the BBB (Better Business bureau). You might be able to find out a lot about a company from them. If you realize that a company has only been in settling debts for a short time and has a plethora of complaints against them, then you know to stay away. One more thing to look for is how long has the company been in business. Some companies only last one or two years before they get shut down or get caught ripping people off. Then some of them only stay around to make as much money as they can and close shop just to open up a few miles awayunder a new company name.

Steve Bis is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.

- Steve Bis