Credit card debt is a widespread problem nowadays. With the economy the way it is, the situation is bound to get worse. As a result of the credit card crisis, cardholders are turning every which way to find a way to settle their debts.
Getting out of debt is not impossible and there are many ways to do it. However, not all lead to debt resolution. Case in point – the recent controversies regarding debt settlement companies. Many cardholders have fallen victim to these companies that are big on promises and nothing else. The problem is serious enough that attorney general of New York State, Andrew M. Cuomo, announced recently that it will investigate over a dozen companies offering debt settlement.
Still, the problem remains – where can cardholders turn to for credit card debt respite?
A very simple yet often overlooked solution to debt settlement is by simply calling your creditor to check if they have programs for customers who are having trouble paying their bills. Experts, however, warn that such a move can negatively affect your credit score. This particular solution is also more suitable for those who have debts in a small number of credit lines.
One of the problems with having credit card debt is having to understand the intricacies of the credit card agreement between the cardholder and the creditor. The problem also multiplies as more and more credit cards are involved. Credit counseling can greatly simplify the problem for the customer.
Financial counseling or credit counseling helps the customer visualize their entire financial situation. With a clear financial picture, the counselor and the customer can find a viable plan for dealing with the debt. The ultimate aim of financial counseling would be a workable debt management plan.
For those looking for credit counselors, the reliable ones are usually members of legitimate organizations, such as the Association of Independent Consumer Credit Counseling Agencies and the National Foundation for Credit Counseling. Counseling fees are very reasonable and even people who cannot afford the fee are still entertained.
Debt settlement companies should be the last choice that anyone with debt problems should consider. Debt settlement companies are very expensive and will require a large payment at the very start. Some companies may do away with large upfront payments, but they usually get their high fees from their customers in some other way.
Experts have agreed that the business model that debt settlement companies follow is very bad for the customer in the long run. Debt settlement plans may actually increase what the customer has to offer and hurt the customer's credit score. Some credit companies also do not deal with debt settlement outfits.