First I would like to say thank you for reading what I have to say on what may be a very important decision for you or your family. I have been working in the credit card debt relief industry for over a decade now and have quite a large knowledge base as to how the industry works. If you are serious about finding a solution to what could be a very bad and detrimental debt problem then you may find the information in this article to be very helpful.
This article is going to be rather lengthy, I want to state that right up front; I am going to address the most popular credit card debt relief programs on the market today. I feel it is necessary to address both the positive and negative aspects of each option. In addition I would like to go over another option a lot of people do not know about. This is debt resolution, a process very similar to debt settlement with the end results of saving money and time; however the negative aspects of debt settlement will be greatly diminished with debt resolution.
The first option is the most common and this is to do absolutely nothing. Which surprisingly is the exact thing most people do and may be what you have been doing up until now, before realizing you must take action to resolve the situation. Most people in debt and this could be including yourself are running on what is called the “credit treadmill”. The credit treadmill is a ruthless and endless cycle of monthly minimum payments and high interest.
This is perhaps one of the worst places to be financially. If you just pay your monthly minimum even if your interest rate is moderately low, you will be stuck in debt for over 38 years! During the course of the decades it takes to pay off this debt you will pay back over five times the original balance in interest alone! If your APR (interest rate) happens to be where millions of other people find theirs, up in the high twenties if not thirties, it will take much, much longer to get out of debt. And naturally you will be losing A LOT more money.
I don’t really feel I need to address the first option anymore. There are no positive aspects to being stuck in debt and doing nothing about it but paying minimum payments.
Once people are made fully aware of the situation they are in, and have come out of denial to the fact that they do indeed have a problem with credit card debt the first option many people look into is debt consolidation.
There are two ways about which debt consolidation can be achieved. There are debt consolidation loans, and then there is consumer credit counseling.
Let me first explain the option of getting a debt consolidation loan. A debt consolidation loan is a loan taken out to pay off the balances on your credit cards. The benefit from doing this is that there will be only one monthly payment made on the loan. Thus taking away the headache of juggling multiple payments to the various creditors. The second benefit is that the loan may come at a lower interest rate.
This is however in my opinion the riskiest of all the credit card debt relief options. Why? Because in the vast majority of cases the only possible way to obtain a debt consolidation loan is by using your home for security; essentially taking out a second mortgage to pay off your credit card 債務重組服務 debts! What you will be doing is transforming your low risk unsecured credit card debt into a high risk loan secured by your HOME!
The sad fact is that over 80% of people who end up in this situation and use the equity in their home to pay off their credit card debts find themselves within the same situation in less than five years.
The old cliché “no pain no gain” applies greatly to this method of debt relief. It is just too easy to use the money in your home, pay off your balances and get on with life. The problem is first you are not out of debt and second nobody ever does the right thing and cuts up their credit cards. It’s just too easy to get back into more credit card debt; you will have your little plastic cards with zero balances practically begging you to charge on them again.
Later in the future when you enter round two against credit card debt you will have not one but two secured financial obligations tied to your home that must take priority over your credit card bills. You also may have other secured financial obligations such as a car loans that must take priority over the new credit card bills as well. Except this time there will be no more equity in your home to get another loan. What happens to many people is they either must file bankruptcy, or risk foreclosure.
I cannot even begin to tell you how many times I have seen this happen over my years of working in this industry and it’s very sad. This is why I said in my opinion a debt consolidation loan is the riskiest and the worst option to use when trying to get out of debt.
This brings me to the next option which is very often confused with debt consolidation because it is quite similar. Consumer credit counseling shares many of the same benefits as a debt consolidation loan but without taking the risk of losing your home. A credit counseling agency will look to get your interest rates lowered, and they will have you make one monthly payment to them which they will disperse to the creditors for you; thus giving you the convenience of one monthly payment.
A reputable credit counseling service may very well be the best option for some debtors. However many of these programs will not be feasible. With a credit counseling program you are still paying back 10