With the average American household carrying around $9,000 in credit card debt and many of those facing rising mortgage payments due to higher property taxes and rising interest rates, it’s easy to see how so many people can become overwhelmed – feeling as though there is no way out! Believe it or not, if you are in serious debt, one of the biggest mistakes you can make is to do nothing!
In this series of blogs, I have been discussing 5 of the biggest mistakes people make when faced with mounting debt, especially credit card debt, and providing some ways you can avoid or correct your mistakes. In my prior blogs I covered the problem with only paying the minimums on your credit card bills, using your home’s equity for credit card debt consolidation, using balance transfer card offers to move debt and using cash advances to make credit card payments. Today I will cover the fifth mistake: Waiting until it’s too late to negotiate with your creditors.
5. Wait until it’s too late to negotiate: If you are one of the thousands of people who find themselves struggling to pay even the minimums, the worst thing you can do is wait until it is too late to face up to your problem and take action. Don’t wait until you find yourself unable to pay.
Once you fail to make your required minimum payments, the credit card company considers your account to be delinquent or “at-risk” which weakens any leverage you may have to settle with your creditors. Delinquent or at-risk accounts are usually turned over to either an internal collection department or an external collection agency, which, in turn, begins contacting you for payment. The longer your account is at-risk, the more likely it is that your creditors will take action against you.
In some cases your account may be sold to a third-party collection agency (for usually pennies on the dollar). Once this happens, the collection agency owns the debt and begins hounding you for payment. The credit card company is now out of the loop and no longer interested in working with you; they’ve technically “gotten their money” from the collection agency.
Failure to pay on your part will likely lead creditors to take legal action against you for breach of contract. Yes, that's right, you signed a contract when you accepted that attractive credit card offer. Once you have a lawsuit filed against you, it is very difficult to negotiate a settlement. You could end up losing your home and having your credit ruined!
Before it’s too late you should check out whether debt settlement is an option for you. Don’t wait until you have lost your leverage to negotiate with your credit card companies on the balances you owe.
How Debt Settlement Works
Debt Settlement is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this type of program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’ll get out of debt for less than what you owe and in a fraction of the time it would take to pay off the debt just making the minimum monthly payments. Because they are settling hundreds of thousands of dollars of debt for hundreds of clients, they have leverage with your creditors that you don’t have. Also, the debt settlement company is in a better position to hold off creditor lawsuits because your creditors recognize that they will likely get more of their money working with the settlement company than they would by harassing or suing you. While your credit rating will drop as a result of being in a settlement program, you won’t ruin your credit for years like you would with a “failure to pay” judgment against you, or with bankruptcy or even consumer credit counseling.
How did Debt Settlement come about? – Debt Settlement, or Debt Negotiation as it is some times called, is a rapidly growing financial service industry that grew out of the exponentially mounting consumer debt and the realization that consumer credit counseling, with its 60-70% dropout rate, just wasn’t working for those seriously in debt.
But it is important to know that not all debt settlement/negotiation companies are alike.
Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.
The program is Credit Card Relief™.
Unique Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a consortium of attorneys. A network of participating program attorneys, local to their clients, provide a free initial consultation to determine if debt settlement is the best solution and once enrolled, offer limited representation. Your creditors are contacted and told that you now have representation in settling your debt. You now have a professional working for you. That’s where your relief starts. The debt is then mediated by a nationally known debtor mediation law firm.
Great Track Record - Credit Card Relief has years of experience, settling over $100,000,000 (one-hundred million) of debt for thousands of clients.
Operate in 46 states.
Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%.
Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.
Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.
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