Stay away from any "debt consolidation" company that promises to cut your debt and payments in half through debt settlement….This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.

Many people who sign up with “debt consolidation” firms incorrectly assume that they have the power to force your creditors to accept settlements…they don’t. Your creditors have the right to refuse settlements and take you to court.
————————–
One option is entering a Debt Management Plan (DMP) with a non-profit credit counselor like CCCS (Consumer Credit Counseling Services). Contact your local Red Cross for a referral to the local Consumer Credit Counseling Services (CCCS). They can negotiate reduced interest and payments. They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to "enrolled in debt management." This does not damage your credit, but it may make it difficult to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would might be denied while you’re enrolled in the CCCS debt management program…

While an accredited credit counseling program like CCCS can be good you need to be aware that these programs are funded by the credit card industry and this can create an obvious conflict of interest in the advise they give you. I advise against using CCCS if you are drastically past due or have already complete defaulted on most of your credit cards….If this is the case then you are better off negotiating settlements directly with your creditors. You may be able to settle in the 25% – 50% range if your cards are already defaulted. If you settle, get all terms in writing. They will probably want a large lump sum rather than small payments over several years. CCCS will not negotiate settlements because they are funded by the credit card industry.

CCCS counselors will often tell people to not file for bankruptcy when they really should. If your debt is overwhelming relative to your income/assets and the reduced payments negotiated by CCCS simply will not work, then you should think about filing for Chapter 7 bankruptcyNeither. Call you financial institution(s) where these accounts are located to work something out with them. If they are unable or unwilling to help, go to a local community bank or credit union to see what you can do to consolidate your debt and lower your payments under one fixed-rate loan. They should be able to help in many cases, but if not, will know of a reputable place where they can refer you. Those debt settlement and consolidation companies charge outrageous fees and many are scams. Your credit is already messed up if you’re behind on payments (esp. multiple accounts), so they can’t help you there. That delinquency will remain on your credit report for at least 7 years from the time it was reported. Don’t be fooled by fancy TV ads, you’re the only one who can resolve any of this.Well if you have numerous creditors and you need to put all those bills into one manageable bill then debt consolidation would be the way

if you owe way too much and find yourself in a tough spot and don’t see yourself being able to return that money back whatsoever try debt settlement (I think this does have some effect on your credit score, because you’re settling for less than you owe originally)

God blessIt depends on what works best for you, Debt Settlement helps you eliminate credit card debt and other unsecured debt. Debt Settlement programs helps you to lower monthly payments, pay a fraction of what you owe, avoid bankruptcy and finally get out of debt in less time. They often settle with creditors for half of what you owe, but not always the best option for everyone since enrolled in the program it often hurts your credit score because instead of making payments to the credit card companies you are making payments to your debt settlement account, who will in the future settle with the creditors, but it will be noted on your credit report. If you can’t make payments otherwise without being in the program then maybe debt settlement is right for you. Check out your options, here’s a great site I found
http://www.golimefinancial.com/faqs_debt_settlement.htmlI have a lot of debt and I am working with a company right now that is awesome. People don’t know that there are laws in place to protect the consumer regarding credit card debt—laws that allow you to stop making credit cards payments immediately.This is the best route to take if you are still receiving credit card statements every month. You can email me for more info if you’d like.To be upfront there is no magical way to get out of Credit Card Debt. Consolidating loans, renegotiating your existing debt, debt consolidation and debt settlements can be a good start, but none of these techniques will get you out of debt permanently. The only way to get out of debt and to stay out of debt is to change your lifestyle. You need to pay for it penny by penny, dollar by dollar. Now, this is not a popular, easy, or fun sounding method of reducing and eliminating debt, but it works. Eliminating your credit card debt would not be easy and, though the sacrifices to be made could seem huge, they are rewarding. Just keep your goal in mind and work with the option that is the most realistic and not necessarily the most comfortable.
To eliminate credit card debt as rapidly as possible at the lowest possible cost to you, we recommend using a tried-and-true credit card debt elimination method often recommended by financial experts. We call this method the Credit Crunch.
List all of your credit cards, including the balance, the interest rate, and the minimum payment percentage and the minimum payment according to the latest statement. The minimum payment percentage can be found in the small print on your credit card statement or your cardholder agreement, and is usually between 2 and 2 1/2 percent of your balance.
Rearrange the list so the credit card with the highest interest rate is at the top and the credit card with the lowest interest rate is at the bottom.
Add up the required minimum payments for all the cards.
Decide how much money you can come up with each month, in addition to the total minimum payments on all your credit cards, to apply to your credit card debt. If you don’t believe you can afford to pay any additional amounts over the minimum payment, it’s time to do a budget and find ways to cut your expenses. If you follow the advice, you WILL find ways to cut costs and generate money to pay down your credit card debt.
Each month, pay the minimum balance on each credit card except the one with the highest interest rate. On the credit card with the highest interest rate, pay the minimum balance PLUS the additional amount you’ve identified to reduce your credit card debt each month.
Continue to do this until the first credit card (the one with the highest interest rate) is paid off entirely. Then take the amount you were paying on that credit card (which is now paid off) plus the amount of the minimum balance on the second credit card, and apply the total to the second credit card each month until the balance is paid off, continuing to pay the minimum balance on all the other credit cards.
Continue crunching your payments on the credit card with the highest interest rate as described above, until all credit card debts are paid off.
Some financial experts recommend paying off the credit cards with the lowest balances first, rather than working on those with the highest interest rate. We disagree with that approach because although it might make you feel better to see the number of credit cards with balances decline, that good feeling will cost you money. Balances with higher interest rates accumulate interest costs more quickly, meaning you pay more to the credit card company in interest and less in actually paying down the principal amount that you owe.
Some strategies to help you get out of debt:
Call every one of your credit card companies and request a lower interest rate. You may be surprised at how quickly some of them will agree. Lower interest rates mean you can eliminate your credit card debt more quickly without increasing your payments.
If your credit card companies are not willing to reduce your interest rate, shop around for a new card with a favorable rate that will allow you to transfer your balance. Do your homework carefully to make sure you can pay off the balance before the introductory rate offer expires.
Cash advances generally have a tag of higher rate of interest. Hence it is appropriate to avoid such advances until and unless the need is too urgent. In addition to such high interest rates the card issuing companies also charge service fees depending on the amount of cash money extracted.
A person should not only pay the minimum monthly payment but also try to make some extra payment every month. This would ease his position in repayment of the debt. Payment of minimum monthly charge results in accumulation of debt in the long run. Hence in order to avoid the state of bankruptcy one must pay more than the stipulated monthly required charge.
A credit card holder must be conversant with the fee structure of the card issuing company which would consequently help him in managing the proper use of the credit card.
A debtor must keep all the information on the credit cards offering lower rate of interest because balance transfer from the high to the low interest rate card would help him in paying off the debts in a more convenient

The best information for debt settlement companies

Tags | credit consolidation