Eliminating Credit Card Debt – Paying for Debt Settlement Is Not an Affordable Proposition

We have all heard the radio advertisements for debt settlement firms promising to eliminate credit card debt. Unfortunately for the people that hire them, these companies do a much better job of selling their services than they do the job of delivering those promised results.

A typical consumer in debt cannot afford to pay for debt settlement services AND settle their credit card debts with what is left over. It would cost $2250-3000 to settle some reduction of $15,000 in debt. Debt settlement firms advise you stop paying the credit card companies and to start paying them instead. They take their fees out then wait for enough money to accumulate to make lump-sum payments to the consumer’s credit card banks. But, that typically will not happen until after those debts have been charged off and sold due to non-payment.

According to the New York Times, creditors will not negotiate reduced balances with consumers who are still making monthly payments and balances on credit cards with missed payments swell with interest and fees. The Wall Street Journal reported that some major creditors, including American Express Co., say they won’t even work with debt-settlement companies. Yet, debt settlement firm’s fees are all non-refundable.

Most credit card banks write off, or charge off, bad credit card debt six months after non-payment commences. In that time, indebted consumers cannot save a thousand dollars a month or more to quickly develop a lump sum for a reduced settlement payment. Hence they are faced with seven-year negative marks on their credit reports, as well as collections and possible lawsuits.

Credit card companies sell off their bad debt to junk debt buyers for 10 cents on the dollar. While, some consumers could still be unwittingly paying money into a settlement fund for the original creditor, it is better to demand the return of that money and to fight off the collection efforts of junk debt buyers with consumer protection laws like the Fair Debt Collection Practices Act, according to the Credit Card Debt Survival Guide. That is because the unsettled portion of the debt will simply be sold to another junk debt buyer for further collection.

Consumers should attempt lump-sum debt settlement as a means of eliminating credit card debt on their own rather than through a debt settlement firm promising too much. But, they must be ready to present a strong need-based case to their credit card companies, according to the Credit Card Debt Survival Guide.

Matt Highlander is a consumer who has researched credit counseling, debt settlement, debt collectors and collection attorneys. If you are seeking credit card debt relief, read Credit Card Debt Survival Guide. Matt Highlander is a contributing writer.

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