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By Angie Devlin
Today’s consumer has more buying power than
ever before. There are offers everywhere:
Many consumers swimming along happily
in a sea of credit suddenly find themselves drowning in a
quagmire of debt. According to a 1992 Federal Reserve
study, 43 percent of U.S. families spend more than they
earn and, according to Cardweb.com, almost one out of
every 100 American households will file for bankruptcy
during their lifetime.
What should you do if you are one of
these consumers? You could take advantage of one of the
many services available to you, such as debt settlement
programs. You can have your financial freedom back again.
What Are Debt Settlement Programs?
For years, debt settlement has been a
popular method for thousands of consumers to regain
financial wellness. Debt settlement means that, with the
help of a settlement negotiator, you work out an agreement
with creditors to settle your delinquent payments or
unpaid balances.
If you are behind on payments on a
high interest loan, for example, it could take you as long
as 20 years to pay your debt. Debt settlement programs
can help shrink your payment terms and amounts, and they
can also provide you with the following benefits:
A Current Credit Report
When you sign up for, and begin, a
debt settlement program, many creditors will “re-age” your
account, or bring it to a current status.
Lowered Interest and Monthly Payments
Depending on your debt settlement
program, your settlement negotiator can help reduce the
interest payments and monthly payments on your outstanding
loans.
A Reduction in Creditor Calls
Creditors call consumers regularly if
they are behind on their payments or not making payments
at all. Negotiators can work with creditors to eliminate
this practice once you are enrolled in a program.
In addition to these benefits, debt
settlement programs can also assign you a credit
counselor. Besides playing an active role in your
settlement, these counselors can also provide you with
financial tools to teach you how to maintain a healthy
spending practice.
What Types Of Debt Are Eligible?
While debt settlements can be
performed on almost every type of debt, most settlement
cases involve revolving credit, or credit cards. Why?
It’s because credit card debt is one of the easiest and
fastest types of debt to acquire. According to the Federal
Reserve, Americans made $1.1 trillion worth of credit card
purchases in 1999. In addition, consumers in the U.S.
carry on average $5,800 in credit card debt from month to
month. Based on this information, the Federal Reserve
reports that if only the minimum monthly payment was made
on this debt, it would take more than 30 years to pay it
off. This debt would also include an additional $15,000
in interest.
However, remember that debt
settlement programs are not just limited to credit cards.
There are many debt settlement programs available that can
address your wide-ranging needs.
Are Debt Settlement Programs Right For You?
Debt settlement programs can be ideal
for people with a good credit history who have been making
consistent payments, no matter how small, on their debts.
If, however, your credit history shows that you are behind
on your credit payments, or that you have significant
“charge-offs” noted on your account history, you might not
be able to participate in a debt settlement program.
Unfortunately, many people don’t
think about healing their debt problems until they decide
to make a big purchase, like buy a new home. Being
proactive with your financial situation in advance and
seeking advice from a credit counselor can help you get
back on the financial well-being track before it’s too
late.
Here are a few tips to keep in mind
as you enroll in your debt settlement program:
Outcomes Are Different For Everyone
Not everyone has the same experience
in a debt settlement program. For example, some people
are fortunate to have their debt reduced down to 75
percent of their original payment, while others may only
experience a 50 percent reduction.
Seek Negotiating Advice from a Debt Settlement Firm
If haggling and hardball negotiation
is not your thing, there are several debt settlement firms
that can provide you with settlement expertise.
Be Patient
Even though debt settlement programs
can put you on the fast track to debt freedom, in some
cases, paying off creditors can still take up anywhere
from two to four years.
Look forward to the future
Stay focused and remember that the
right debt settlement plan can lift you out of the
quagmire and have you plain sailing again in no time!
About The Author
An independent
public relations consultant, Angie Devlin provides
comprehensive communications and promotion services to
companies in the high-tech, education, and retail
industries. With over 10 years of experience, she has
held a variety of media relations and marketing positions
for companies such as Sun Microsystems and
Hewlett-Packard. Angie holds a B.A. degree in Technical
Journalism and Public Relations from Colorado State
University and is based in Westminster, Colorado.
Sources
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The Federal Reserve. http://www.newstepsolutions.com/debt-statistics.htm
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Cardweb.com. http://www.newstepsolutions.com/debt-statistics.htm
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