Credit Card Debt Settlement - Is This A Legitimate Debt Relief Option?
Online, July 13, 2010 (Newswire.com) - Consumers see the advertisements everywhere claiming that it's possible to eliminate credit card debt by 50% with a debt settlement process. How legitimate is this? Well, the facts are that it is possible to eliminate credit card debt but not everybody should sign up for such a program.
Credit card debt settlement only makes financial sense for consumers who are struggling to pay their bills and have at least $10,000 in unsecured debt. Consumers must be able to prove a financial hardship such as a loss of employment or excessive medical bills to qualify for debt settlement. According to The Association Of Settlement Companies (TASC), the debt settlement industry was responsible for settling over $1 billion in unsecured debt in 2009 alone. This resulted in approximately $600 million in consumer debt being eliminated while collecting nearly $400 million for creditors.
Debt settlement has been around for around 10 years however it has never gained so much popularity and controversy than it has the last couple years. The recent changes in the bankruptcy laws made it more difficult for debt ridden consumers to qualify for debt relief. When millions of consumers could no longer qualify for bankruptcy many of them decided to go the debt settlement route. This rapid growth in the debt settlement industry unfortunately led to several unethical companies entering the market taking advantage of debt ridden consumers. A recent push from congress to clean up the industry has resulted in several debt settlement companies being shut down.
The process of debt settlement basically works like this. Instead of making payments to creditors, consumers will pay into a savings account until enough funds are built up to begin the debt negotiation process. The average debt settlement deal in 2009 was negotiated for 50% of the balance however results vary case by case. A lot of it depends on how skillful the debt negotiators are which is why it is very important for consumers to know how to locate legitimate debt negotiation programs.
Credit card debt settlement is the fastest way to eliminate unsecured debt and avoid bankruptcy. Most debt settlement programs last 1-4 years and after that the consumer is debt free. This however does not come without consequence. The consumer's credit score will be negatively affected and collection calls are likely to increase in the short term. Many consumers that have opted for credit card debt settlement have decided that they would rather eliminate 50% of their unsecured debt rather than have a high credit score. It should be noted however that once the debt is settled the consumer will be able to build back credit more quickly as their debt to income ratio will be much better.
it is very critical for consumers to know how to locate legitimate debt settlement companies that have a proven track record in settling consumer debts. The easiest way to find legitimate companies is to visit a free debt relief network. There, consumers will be able to locate the best companies in the country and also receive a free debt consultation to determine what the best debt relief option is. These networks are free to use and have helped thousands of consumers avoid being ripped off.
To locate the top performing debt settlement companies in your area for free debt relief advice check out the following link:
