Your Debt Settlement Choices

When you are being overwhelmed by credit card debt, you have the following options available to you:

1. Do nothing and hope things get better
2. Debt consolidation
3. Enroll in credit counseling or debt management
4. File Bankruptcy
5. Enroll in a debt settlement program

Option One: Do Nothing

Americans have charged over 1 trillion dollars worth of goods and services on their credit cards and through unsecured debt. The average household has over $9,000.00 in credit card debt. It is common for families to have 20, 40 and even 80K or more of credit card debt today. There is nothing that can destroy a family faster then debt. When you get into credit card debt, unless you pay your balances in full each month, you are already getting yourself behind the ball. By the time you get to the point where you are barely able to make your minimums each month, you are already in trouble. At this point, many people begin to borrow from peter to pay paul. In other words, this means borrowing from one card to pay off another card. The next step from here is usually falling behind on your obligations, and those low interest rates that seemed so attractive at first will begin to carry interest rates well over 20%, and sometimes over 30%. Banks also have the ability, through a clause called universal default, to begin raising your interest rates at their discretion. The bottom line is that they can do virtually whatever they want. Unfortunately most people choose to do nothing by the time they get into this situation. Procrastination can be very expensive when it comes to handling your creditors. Hoping the problem will go away and/or avoiding opening your statements is not a realistic option to take care of your debts. Late fees and finance charges will continue to add up and become an overwhelming situation both financially and emotionally. Eventually, your debts must be handled. Your creditors are not in the business of being sympatric to your cause. Their job is to make money for their shareholders. You have to take action, doing the same things will produce the same results, and with debt, it can get worse and more expensive by the day….

Option Two: Debt Consolidation

Debt consolidation is the route most people think of when it comes to solving their financial situation. This is taking all of your debt and wrapping it up into one monthly payment at a lower interest rate typically 10-18% or more. It sounds good, but being able to borrow the money in this type of lending and economic environment can be difficult, if not impossible. While most consolidation loans were once backed by people’s homes, the recent downturn in the mortgage and real estate markets this can be next to impossible. Most people don’t get out of debt by borrowing more. In other words you can’t borrow your way out of debt.

Option Three: Credit Counseling or Debt Management

Credit counseling and debt management programs are essentially the same. As the debtor, you’ll make one monthly payment to a credit counseling agency and they will distribute the funds to your creditors on your behalf, usually at a lower interest rate. Credit counseling agencies have come under an incredible amount of scrutiny due to the way they derive their income from fees, and from whom. They depend on the creditors for the majority of their income in the form of kick backs from the creditors. In other words, they are working for your creditors, not for you. Seventy-Five percent (75%) of people that start credit card counseling programs end up dropping out, and then you may be far worse off then when you started. They do not accept all debt types, and if you fall behind they can throw you out of the program. Credit counseling can also have clauses that make you unable to purchase a car or obtain other types of financing while in the program. With these agencies, make sure you know who they are working for. Is it you, or your creditors? Comparing credit counseling program payments and terms to our debt settlement program may shock you as well.

Option Four: Bankruptcy

When you finally come to the end of the road and there is no other way to solve your financial situation, bankruptcy may seem like the last and only option. Once you have declared bankruptcy, all creditors will cease in their collection efforts with you. Many people in this country file bankruptcy for this reason, not realizing there are other ways and means to get the creditors off your back, and other options available. There are two types of bankruptcy available to you. Chapter 7 involves the full discharge of your debts. In 2005, congress passed new laws regarding bankruptcy that benefited credit card companies greatly. It makes it very difficult to obtain a Chapter 7, which forces you, more times than not, into a Chapter 13 repayment plan. You have to qualify for the Chapter 13 as well. Chapter 13 is where as the debtor you will pay back a percentage of your debt, up to 100%, over a 3-5 year period. The attorneys that perform this work also charge a fee for their services that can be thousands of dollars. Both options typically would not be considered when the debtor has equity in his/her home or assets that could be sold. Most creditors would obviously prefer to work out a deal with the debtor then have them file bankruptcy.

Option Five: Debt Settlement

Debt negotiation or debt settlement as it is now called is an honest and effective alternative to the above mentioned programs. Debt Settlement programs can be the most aggressive way to handle your debts. Debt settlement companies work for the consumer, you, not the creditor. This process generally allows you to handle your debts in a much shorter time frame then any other program.

The advantages of enrolling in a Debt Settlement a program are as follows:

1. Honest and Honorable
2. No public record or credit filing of ever enrolling in a debt settlement program
3. You choose the program term and payment you can afford
4. Allows for flexibility if a monthly payment is missed or if additional hardships arise

The disadvantages of enrolling in a debt settlement program are:

1. Debt Settlement companies can’t guarantee that they can settle all of your debts or the exact amount of settlement with each individual creditor
2. You may still be sued by your creditors
3. Debt Settlement companies can’t guarantee that the creditor calls will stop
4. You may have to pay taxes on the amount forgiven by a creditor

(Please look at the FAQ section of our web site.)

If you would like to see if your debts qualify for Legacy Debt Solutions debt settlement program, please fill out our online form or call us at the number below. All of our debt negotiators are licensed with the International Association of Debt Arbitrators.