New FTC Rules Support Consumers Seeking Debt Relief

In the last quarter of 2010, new FTC rules went into effect to protect consumers seeking debt relief through debt settlement type companies. This change spells good news to those struggling with mounting credit card debt or other unsecured debt for two important reasons:

1. it cleans up the deceptive and abusive practices that have been associated with some debt relief services and
2. it reinforces the legitimacy of negotiating-down and settling debts with creditors as a way to get out of debt.

You can now feel comfortable in pursuing this option to eliminate your debt with the protection of the FTC.

How Did the Debt Relief Changes Come About?

Since 2005, when Congress passed The Bankruptcy Abuse Prevention and Consumer Protection Act - which actually limited consumers ability to file Chapter 7 bankruptcy to discharge unsecured debts - consumers have been desperate for ways to unburden themselves of mounting debt, especially credit card debt. With the reduction of home values due to the mortgage crisis, debt-consolidation loans were no longer a viable option. Programs such as Consumer Credit Counseling were also ineffective for many people. Their debt was just too big and the time to pay it back just too many years!

As consumer debt grew, so did the debt settlement industry as a way for people to settle and discharge their debts with their creditors for less than what they owed. While many people have found true relief using a debt settlement company, unfortunately, as is the case in many industries, the rise in demand also lead to the rise in unscrupulous companies making unrealistic promises of how much they could save you and how quickly they could get you out of debt. In addition, many so-called experts in the financial reporting world were skeptical of the industry and critical of options that enabled people to settle debts for less than what was owed. Their philosophy was: “It’s your debt problem; buckle down and pay back what you owe!” The unethical practices of some, along with the negative press, cast a shadow on the industry.

Yet, during all of this, banks and credit card companies themselves were under scrutiny by Congress for their own ruthless practices that kept people in debt by raising interest rates without warning and mounting up over-draft charges and late fees. In 2009, in response to consumer complaints and the rampant rise in debt, Congress passed a new law to protect consumers from these kinds of practices. While this helped to stem the blood flow, it did little to cure the epidemic.

With the FTC’s enactment of the new provisions governing debt relief services under the TSR (Telemarketing Sales Rule), there is now a glimmer of hope for debt-strapped consumers. A better product has emerged from the industry cleanup that provides consumers with a doable solution to debt problems, allowing them to discharge their debts honorably and, in most cases, for less than what they owe.

The new Debt Relief Rules and What They Mean for You

1. It’s illegal to charge upfront fees. Debt Relief service providers cannot collect any fees from you until they have settled at least one of your debts. They can, with certain restrictions, require you to set aside money in a dedicated account for your fees and for payments to creditors. The benefit to you is that the service provider has a real incentive to settle your debts as quickly as possible; meaning, you will start to reduce your debt burden in a much shorter period of time.
2. Certain information must be disclosed before signing. Before you sign up for debt settlement services, the provider must disclose specific information about the service, including: how long it will take to get results, how much will it cost, the negative consequences that could result from using debt relief services, and key information on how your account is set up and managed. The benefit to you is that you should have a clearer understanding of how their debt relief program works and what you can reasonably expect before you engage their services.
3. No misrepresentation of services. Debt relief service providers are prohibited from making false or unsubstantiated claims about their services. Again, the benefit to you is a clearer understanding of what you can expect based on the amount of debt you have and the amount of money you can afford to pay towards discharging those debts. Gone are the deceptive, to-good-to-be-true practices of leading you to believe you can be debt-free for just pennies on the dollar.

I hope this blog post will help those of you struggling with mounting debt and uncertain about whether to look at debt settlement as a way to get out of credit card debt. If you are wondering whether debt settlement is a good option for your debt situation, you can call Credit Card Relief Toll-Free at 866-960-5454 for a free, no-obligation consultation. This is one company that for the past decade has provided a consistently reputable product and has helped thousands of people get out of debt. You can also click here and visit their website to learn more.

A Debt Reduction Diet You Can Live With

Lately, I have been listening to some of the better-known financial and personal debt "experts" and their advice to people on why and how they should get debt-free. While I don’t disagree in principle with much of what they are saying, I do believe that some of their advice is a little hard to swallow and not always practical for many people struggling with debt. I also know, and question why, they leave out one of the best, and most palatable options available today.

First, let me say, there seems to be this prevailing theme of telling people that: You got yourself into this mess so you better just suck it up and dig your way out, no matter what it takes. Desperate times call for desperate measures. Put yourself on a strict financial diet. If you have to sell everything you own, including the roof over your head to pay off your debt, then just do it!

These may indeed be desperate times, but desperate actions don’t necessarily reap the best rewards. Given the current housing market, it may not be realistic to try to sell your house right now, especially if you have a second mortgage. Assuming you can even get it sold, you may find that you owe more than you can make by selling your house, figuring in realtor fees, etc. I am also baffled how these experts can tell people who are struggling to keep their heads above water to start paying more on their credit card bills than they have in the past in order to pay down their debt. Do you need to make sacrifices and change your spending habits in order to get out of debt? Should you cut out the $4.00 lattes? Yes to both! But for those in serious debt, it just may not be enough, especially for those whose debt is not from frivolous spending habits, but due to legitimate hardship issues. For these people, it could take years to ever pay down their credit card debt at the ridiculous interest rates being charged and with the exorbitant fees and penalties.

It amazes me that we have people talking about how terrible McDonalds and other fast food businesses are to corrupt us with their unhealthy foods, while the credit card industry aggressively goes after and dishes out credit to those already overweight in debt and no one says a word about what they are doing – how the credit card industry is contributing to the unhealthy financial state of millions of Americans. Have you noticed how, even though you are buried in debt, the credit card companies keep sending you credit card offers? They actually love people like you. It is called rolling, but I’ll save that whole explanation for another blog.

Is now the time to commit to a diet plan to eliminate your credit card debt? Absolutely! But it doesn’t have to be the starvation diet you probably have been hearing from others. There is a realistic and effective diet that these so-called experts won’t tell you about. This diet is one that you can live with. It is a diet that can get you debt-free in months instead of years and for far less than what you owe. This is not a miracle pill, nor is it a shady industry scheme. It is a totally legal program, recognized by the credit card industry, for getting you out of debt, and solvent with your creditors. Unlike bankruptcy, it won’t leave you with the serious long-term black mark on your credit. The diet solution I am talking about is debt mediation (or negotiation or settlement).

So why don’t the experts talk about the debt mediation option?
Well, I think there are probably a couple of reasons. 1) I think many don’t really know how it works. Some confuse it with Debt Consolidation. 2) I also think some aren’t comfortable publicly recommending a program in which you will typically pay less than what you owe. With debt mediation, the credit card companies are agreeing to settle for less than what you owe them out of the realization that they may get none of what you owe or just pennies on the dollar if they have to sell your debt to a collection agency. I don’t think the experts want to be the ones telling you that you don’t have to pay back every penny, plus all the outrageous interest, and all the ridiculous fees owed to the creditors. After all, who else but the financial industry (namely credit card companies and banks) are some of the biggest purchasers of television advertisements, the very people sponsoring many of their programs?

Interestingly, they seem to have little problem recommending consumer credit counseling, or debt management, under the guise that many claim to be “not for profit.” Unfortunately, this program has a poor success record with 60-70 % dropping out and is facing serious government scrutiny. In fact, according to Robert Manning, Director of the Center for Consumer Financial Services, the IRS findings conclude that CCCs are essentially debt collectors, not charities. Click Here, to learn more about this unattractive debt solution.

Debt Mediation – The Debt Diet You Can Live With
If you’re one of the thousands of people with high credit card debt ($10,000 or more), have minimal savings and are the one in six who pays only the minimum due every month, then you need a realistic plan to get yourself out of debt and back on track. I recommend you consider debt mediation (or debt settlement). By enrolling in a debt settlement program, you could realistically be out of debt in months instead of years.

What is Debt Mediation or Debt Settlement?
Debt Mediation 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, and marks the debt “zero balance”, which is very important and positive for your credit report. 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 relationships built over time and leverage with your creditors that you don’t have.

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™.

Nationally Recognized Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a network of participating program attorneys, local to their clients, and provides a free initial consultation to determine if debt mediation is the best solution. Once enrolled, 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 recognized debtor mediation law firm.

Great Track Record - Credit Card Relief has years of experience, settling over $110,000,000 (one-hundred and ten million) of debt for thousands of clients.

Operates in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%. They also have reasonable fees that you can live with.

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.

Or call (866) 960-5454

They can help you determine the best solution for getting you free of debt.

Don’t Delay! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

Waiting too Long to Seek Debt Relief Help– Mounting Credit Card Debt Mistake # 5

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.

Using Credit Card Cash Advances – Mounting Credit Card Debt Mistake # 4

In this series of blogs, I am 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 three 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 and using balance transfer card offers to move debt. Today we will discuss the fourth mistake.

4. Rob Peter to pay Paul: Use credit card cash advances: Cash advances may seem like a way to hold the wolf at bay, but borrowing cash from one credit card to pay on other cards or bills will really cost you and only delay the inevitable. Many people don’t realize that cash advances typically carry both a transaction fee like balance transfers of around 3% and a higher finance charge (interest rate) than applied to other purchases. This means that when you borrow money at, say, 3% fee plus 24% APR to pay on a bill at, say, 12% APR, you’re robbing Peter to pay Paul with money that is costing you more and digging that debt hole you’re already in even deeper.

• Be sure to read your credit card statement each month. You may occasionally find that a charge that you considered a “purchase” was actually treated as a cash advance by the credit card company. If you use an ATM machine for a cash advance, there can be an additional charge by the ATM’s bank.
• Another gotcha occurs when you make a payment toward your balance. Most issuers apply payments to purchases before they apply payments to cash. If you carry a balance on your card, this means that you will continue to pay that higher interest rate on your cash advances until you pay off your entire balance.
• And there is one more legal gotcha on cash advances: If you get into debt and have to consider bankruptcy, cash advances are exempt from Chapter 7 discharge of debts. You will still have to pay back any cash advances.

You’re in serious trouble if you are borrowing more money to make payments on money you already owe. Becoming dependent on cash advances to "make ends meet" can be a sign of serious debt problems.

If You Are In Serious Debt Trouble Do Consider Debt Settlement

If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. 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 program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’re now out of debt for less than what you owe and in a fraction of the time it would have taken to pay off the debt just making the minimum monthly payments.

Background – 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.

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™.

What Makes Them Unique?

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%.Unique Program 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. The debt is then mediated by a nationally known debtor mediation law firm.

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.

Check back tomorrow for my next blog that addresses another all too common mistake and what you can do!

Mounting Credit Card Debt – Don’t Make One of These Mistakes – Con’t.

In this series of blogs, I am 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 two prior blogs I covered the problem with only paying the minimums on your credit card bills and using your home’s equity for credit card debt consolidation. Today we will discuss the third mistake.

3. Using Balance Transfer Card Offers to Move Debt: You’re struggling to pay on your credit card debt each month, and then you get one of those enticing offers to transfer debt from one of your existing cards and not make any payments for 3 months. Wow! It sounds great, doesn’t it? While those low introductory, 0% rates look like an easier way to get out from under your mounting debt, if you aren’t careful it can actually end up costing you more. How?

• First, if you are transferring a balance from another card, there is typically a transfer fee. The average fee is 3% of the amount transferred. This means that a transfer of $10,000 could cost you $300 in fees alone.
• Second, most issuers only grant a "grace period" on purchases if you have completely paid off your previous balance. If you transferred a balance to take advantage of the low introductory rate and you don’t plan to pay off the balance until the end of the introductory period, say 6 months, interest charges will begin to accrue on each new purchase from the day of the transaction.
• Third, issuer terms usually state that 100% of each payment you make is applied to the balance with the lowest interest rate. Since your new purchases are typically subject to a higher interest rate, they will be the last in line to get paid off. Your payments will be applied to that balance you transferred instead of toward your new purchases. So your new purchases will sit there, building up interest at the highest rate, and you can't stop it without paying off the balance transfer in full first, the very balance you had hoped to pay off over time.
• Fourth, if you don’t pay off the balance transferred during the introductory period, once the period ends, you’ll be charged higher interest on that left over balance, along with all your new purchases.

What to do instead:

If you’re trying to get away from higher interest cards:

1. Rather than transferring your balances, stop charging on your higher interest rate cards and work on paying those cards down first, while continuing to pay at least the minimums on all others.
2. You may be able to negotiate a lower interest rate (as long as your credit hasn’t been damaged), especially if a creditor thinks they might lose your business to another creditor.

If You Are In Serious Debt Trouble Do Consider Debt Settlement

If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. 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 program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’re now out of debt for less than what you owe and in a fraction of the time it would have taken to pay off the debt just making the minimum monthly payments.

Background – 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.
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™.

What Makes Them Unique?

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%.

Unique Program 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. The debt is then mediated by a nationally known debtor mediation law firm.

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.

Check back for my next blog that addresses another all too common mistake and what you can do!

Relief From Debt - Don't Make One of These Mistakes

Growing consumer debt is a very real problem in this country. While the moguls on Wall Street continue to reap the rewards of a bull market and vehemently assert that ‘the economy is booming’, the average American on Main Street isn’t so sure. A recent Washington report states that 70% of hourly workers are living paycheck to paycheck. They struggle silently each day to make ends meet, just getting by, until the car breaks down, dad gets sick and can’t work, or mom looses her job due to the factory closing and her job moving overseas. Then, in desperation to try to resolve the situation, many make one of the all too common mistakes I discuss below which can actually make matters worse! Here is what you need to know so you don’t end up digging your debt pit even deeper!

Don’t Use Your Home
If you thought about taking out an equity line against your home or refinancing your home to use your existing equity to pay off credit card debt, be very, very careful! While it may seem like a good option since the interest rate on an equity line or a mortgage is typically less than on a credit card, there are some serious drawbacks you must be aware of before you make this choice.

Drawbacks

• Don’t trade unsecured debt for secured - By borrowing against the equity you have in your home, you are trading unsecured debt for secured debt. Sure those credit card balances or medical bills are paid off, but now, if you default on what is essentially a second mortgage on your home, the lender can foreclose and you could lose your home. Putting your home at risk is not a good tradeoff, especially for those seriously in debt and already struggling to make monthly payments.
• You could owe more on your house than it is worth - With loans typically spread over 15 – 30 years, if you do have to sell your home for any reason in the short term, you could actually owe more between your mortgage balance and home equity loan than what you make on the sale of your home. In the current real estate market with dropping home prices, this is a real threat!
• Equity loans typically have an adjustable rate. As the prime rate rises, the loan rate rises and with it your monthly loan payment.
• Some people, seeing zero balance credit cards for the first time, suddenly think they have a whole new line of spending power. They somehow forget that they are still paying on that credit card debt! They start charging again and are suddenly faced with both the equity loan and maxed out cards to repay.

Watch Out for Low Introductory Rate or Balance Transfer Card Offers
While those enticing low introductory, 0% rates look like an easier way to get out from under your mounting debt, if you aren’t careful it can actually end up costing you more. How can this happen?

• First, if you are transferring a balance from another card, there is typically a transfer fee. The average fee is 3% of the amount transferred. Some issuers limit the fees to $75, but a growing number are doing away with the limits. This means that a transfer of $10,000 could cost you $300 in fees alone.
• Second, most issuers only grant a "grace period" on purchases if you have completely paid off your previous balance. If you transferred a balance to take advantage of the low introductory rate and you don’t plan to pay off the balance until the end of the introductory period, say 6 months, interest charges will begin to accrue on each new purchase from the day you buy them.
• Third, issuer terms usually state that 100% of each payment you make is applied to the balance with the lowest interest rate. Since your new purchases are typically subject to a higher interest rate, they will be the last in line to get paid off. Your payments will be applied to that balance you transferred instead of toward your new purchases. So your new purchases will sit there, building up interest at the highest rate, and you can't stop it without paying off the balance transfer in full, the very balance you had hoped to pay off over time. The only way around this is to take out the low introductory rate card and use it exclusively to pay off your old balances. Make all new purchases on another card until the old balance is paid off. Focusing only on the introductory rate without reading all the terms and conditions could leave you paying more in interest and fees than you did on your old card.
• Fourth, if you don’t pay off the balance transferred during the introductory period, once the period ends, they start making higher interest on that left over balance, along with all your new purchases.There is one more potential gotcha buried in the fine print. If you happen to be late on your payment for any reason during the introductory period, your rate will immediately skyrocket, in some cases as high as 30%. Before you sign up, be sure you know what all the terms are for that seemingly wonderful new card offer!

Don’t Assume Bankruptcy Is The Easy Or Only Option
If you thought your best option was to just file bankruptcy and start over…think again! Under the new bankruptcy laws, it is substantially more difficult to file bankruptcy as a means of escaping mounting debt. Under the new laws, before you can file bankruptcy, you must first complete financial counseling. You will have to attend classes and provide detailed records of your income, expenses, and tax records. (Remember, under a “consumer credit counseling” program, you will still be required to pay back the entire debt.) Only if the counseling agency determines that you are financially unable to complete a payment plan will you be able to proceed with filing bankruptcy.

Chapter 7 Bankruptcy discharges (wipes out) your debt. Chapter 7 qualifiers usually have little to no assets. Under Chapter 7, your assets (less those exempt by your state) are sold to pay your creditors as much of the debt you owe as your assets will cover. The remaining “eligible” debt is discharged. However, there is some debt that is not dischargeable and you will still be required to pay in full, such as taxes, spousal and child support, student loans, and certain luxury purchases. Under the new law, items deemed as “luxury” of $500 or more purchased within ninety days of the bankruptcy filing (or $750 within seventy days) are not dischargeable. If your income is too high, you won’t be able to qualify for Chapter 7 and will have to file Chapter 13.

Chapter 13 Bankruptcy is a debt payment plan. You will agree to pay most or all of your debts over a period of time, three to five years. The courts will assign a trustee who will review your finances and determine how much you will pay each month. Again, your Credit Report will show a bankruptcy.

Drawback to Bankruptcy: For many, bankruptcy is the only option, but it isn’t a “get out of debt free” card. It might be a way to stop those harassing phone calls but it is a painful process in and of itself and the wound doesn’t heal quickly. A bankruptcy stays on your credit report for ten years and will stay on your court records for 20 years. Many applications, including those for jobs, loans, or certain types of insurance ask you if you have ever filed for bankruptcy. More and more, companies are conducting background checks on prospective employees and a bankruptcy will show up on the report. Bankruptcy should really be your last resort. There is a better way out!

Do Consider Debt Settlement If You Are In Serious Debt Trouble
If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. 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 program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’re now out of debt for less than what you owe and in a fraction of the time it would have taken to pay off the debt just making the minimum monthly payments.

Background – 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.

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™.

What Makes Them Unique? 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%.

Unique Program 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. The debt is then mediated by a nationally known debtor mediation law firm.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.

Don’t Be Lured By Too-Good-To-Be-True, Get-Out-Of-Debt Options
Advertisements to get you out of debt for pennies on the dollar are all over television and the radio these days, but if it sounds too good to be true, it probably is! If they’re quoting you 50% or more in debt reduction or 12 months to be debt free, ask them if they will put that in writing! Then listen to them back-peddle. Some of these companies have a list of filed complaints with their local Attorney Generals or the Better Business Bureau that are a mile long and some are being scrutinized quite closely. The reality is, most credit card companies will negotiate the balance owed, but not for a mere pennies on the dollar.