Getting Debt Help After the Credit Card Reform

Expert at suggests tools to help with credit card debt

SAN MATEO, Calif., June 3, 2009 – With the nation's credit card issuers soon to be regulated by new credit card reform signed into law, the time is right for consumers to get out of debt, and free online consumer finance portal can help. 

 "Now that credit card reform legislation has passed, it's a great time for consumers to take control of their debt," said Ethan Ewing, president of "To do so, consumers need to understand the available options." 

 Ewing suggested consumers should first work to pay off problem debt themselves. "Ultimately, you want to charge only what you can pay off in full every month and live debt-free," Ewing said. "Meanwhile, to make progress, pay as much as you can on your debt that has the highest interest rate. Stay current with other debts by making minimum payments. When the first debt is repaid, use the same strategy on the next-highest-rate debt." Always make mortgage payments first, Ewing reminded consumers.

 "It is best to handle debt yourself to protect your credit score," Ewing added. If that is not possible, other legitimate options for help do exist, he said. To start with, "if you cannot make even minimum payments on bills, call creditors and ask for temporary hardship status," he explained. Some creditors may work out payment plans. 

 For those who cannot manage minimum payments, Ewing provided a summary to help consumers understand their options for help, including:  

·  Debt settlement. A debt settlement firm works on consumers' behalf to lower principal balances due, often obtaining savings of 50 percent of the total debt. The firm does not make monthly payments to creditors, but rather negotiates with the consumer's creditors while the consumer accumulates funds for the settlement. Debt settlement firms charge consumers a fee for their services, typically a percentage of the debt enrolled or a percentage of the debt reduced.

Consumers who persist with a debt settlement plan can resolve their debts in two to three years at significantly lower cost than that of a debt management plan. Debt settlement typically provides better repayment terms than a Chap­ter 13 bankruptcy filing and does not leave a permanent bankruptcy judgment on one's record. 

Debt settlement may have a negative impact on credit ratings and profiles and is best suited for consumers in serious financial hardship who cannot afford to make minimum payments on bills and who cannot afford the higher monthly obligation typical debt management programs require.  

· Debt management. Debt management companies, also known as credit counseling agencies, maintain pre-arranged agreements with credit card companies to lower interest rates on a consumer's existing debt to a creditor-issued "concession rate." Debt management companies collect a monthly fee from consumers, as well as revenue from the credit card companies called "Fair Share" payments. In debt management plans, monthly payments decrease, but principal amounts owed do not. Consumers who are able to stick with the payment plans typically can pay off debt in approximately five years. Debt management plans also require higher monthly payments than debt settlement programs, and are best suited for individuals who are facing a less-severe financial hardship than a typical debt settlement customer.

· Bankruptcy. Bankruptcy can leave a severe negative impact on a filer's credit rating for many years. Under bankruptcy reform enacted in 2005, it is harder and more expensive to obtain than it used to be. Under the new law, fewer people can eliminate most consumer debt by filing Chapter 7 bankruptcy, taking more people to Chapter 13 filings. Chapter 13 re­quires consumers to pay back debt on a repayment plan (which can take up to five years), while still suffering the negative repercussions of a bankruptcy on their credit reports and public records. Generally considered a last resort, consumers considering a bankruptcy filing should speak to a bankruptcy attorney licensed in their state. 


"In checking into these options, beware of any company that claims its solution is right for you without undergoing a thorough analysis and screening process," Ewing said. "Know that facing up to unhealthy debt actually provides great freedom. Act now to build a healthy financial future. With hard work, and possibly some help, you will be able to recover as the economy does." 

 About (

Based in San Mateo, Calif., ( is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt consolidation, insurance, mortgages and other loans. holds the No. 257 spot on the Inc. 500 list for 2008, and the No. 3 spot on Entrepreneur Magazine's Hot 100 list of the fastest-growing U.S. companies. and its sister companies, Freedom Debt Relief and Freedom Tax Relief, are wholly owned subsidiaries of Freedom Financial Network, LLC. The company has served more than 50,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at /news_releases/.