- 4 min read
- Find the Credit Card Debt Relief Option right for your financial situation.
- Debt Settlement Companies can help you if you have bad credit and are struggling to pay each month.
- Don't pay upfront fees.
Get Professional Help for Credit Card Debt
Finding the right credit card debt relief company can be frustrating. After all, there are different options available, and how do you know which one is right for you? How can you find a credit card debt relief company when you are not sure of what needs to be fixed?
When looking for credit card debt relief companies, the first solution that comes to mind is debt settlement. If you have credit card debt over $10,000, bad credit, and are struggling to make payments, then debt settlement is a good alternative.
Before you get professional help, follow these steps, and find yourself closer to being debt free:
- Learn about the different debt relief options
- Learn about Debt Settlement Companies
- Read Reviews
Get a Personalized Debt Relief Solution
Wouldn’t it be nice to just plug your problems in a “debt relief” machine and find a solution to your problem? Bills.com developed an innovative tool, Debt Coach, to help you find the right debt solution, most appropriates to your financial situation.
Learn About the Different Debt Relief Options
When talking about credit card debt relief, there are different options available. The main factors in deciding which option to choose is your financial situation, mainly your asset position (do you have equity in your house) and your cash flow (do you have sufficient income to pay your bills and monthly expenses).
Here is a table with a brief outline showing the different credit card debt relief options and a customer’s financial profile:
|Debt Relief Solution||Asset Position||Cash Flow & Credit|
|Cash out Mortgage Refinance||Strong Equity Position||Good-Excellent Credit. Positive Cash Flow. DTI under 45%|
|Personal Loan Consolidation||Strong Net Worth Preferable||Excellent Credit. Positive Cash Flow.|
|Debt Management||Poor Credit. Barely treading water.|
|Debt Settlement||Poor Credit. Can't Make Minimum Payments. Probably facing collection calls.|
Learn about Debt Settlement Companies
Debt Settlement is not a quick fix. If a company promises you immediate debt relief, or easy debt relief, then mark them off your list. A debt settlement company works with you in the following manner:
- You receive a preliminary consultation to review your financial situation and determine if your credit card debt is appropriate for the program. This includes an analysis of your asset position and your ability to make monthly payments. Signing up for a program that you cannot finish does not help anyone. Remember, in the beginning your debt problems will increase, as you stop making payments to your creditors, and they intensify their collection efforts.
- You receive a written contract outlining the services offered and the price charged. Make sure that the debt consultant explains to you any unclear points.
- You open a special designated account, in your name and control. You make monthly deposits into the account.
- The debt settlement company negotiates with your creditors a settlement.
- Upon completion of a settlement, you transfer money to the creditor and pay a fee to the debt settlement company.
A good debt settlement will have these traits:
No Upfront Fees : Due to many unethical companies taking upfront fees, the FTC stepped in instituted new regulations in October 2010. The regulations ban telemarketing credit card debt relief companies, in the debt settlement industry, from taking upfront fees. These companies can take a fee only when they reach a settlement with a creditor. The fee should be applicable to that settlement only. The law has loopholes allowing for non-telemarketing companies, or companies that meet their clients face to face, to charge upfront fees. Avoid companies taking upfront fees and look for companies offering fair and ethical services.
Affiliation and Accreditation: The AFCC (American Fair Credit Council) is an industry trade organization. Their goal is to ensure that debt settlement companies treat their customers in a fair and ethical manner. All members must adhere to a strict code of conduct. They require that no affiliated companies, no matter how they provide their services, take upfront fee. The AFCC has a two-tier membership. There are currently 26 regular member and 15 accredited members. Accredited members are required to have an annual, rigorous onsite audit including customer service, negotiations and marketing departments.
Track Record: The next characteristic to look into is the credit card debt relief company’s track record. Longevity is not a guarantee of good service or ethical behavior. However, experience in a field as complex as debt settlement is a definite advantage. Creating contacts with creditors, understanding the underwriting procedures, and setting up an efficient customer relationship system are all intricate processes.
Debt Settlement Company Reviews
Looking for credit card debt relief company reviews is difficult. Many of the reviews are from very dissatisfied customers. Other “reviews” are from companies that are promoting certain debt settlement companies. Neither of those points makes reviews a tool to avoid. Read the reviews with a grain of salt. Learn what customers are complaining about, and make sure that the debt consultant addresses those issues with intelligent answers. By reading reviews, you will learn more about the process and the types of questions to ask.
Get a Free Debt Relief Consultation
Quick tip: Fixing credit card debt through a debt settlement is complex. Learning about your debt relief options and credit card debt relief companies gives you a head start. Get a free no commitment consultation from one of Bills.com pre-screened professional debt relief providers.
Dealing with debt
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q2 2022 was $16.15 trillion. Student loan debt was $1.59 trillion and credit card debt was $0.89 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
Collection and delinquency rates vary by state. For example, in Montana, 14% have student loan debt. Of those holding student loan debt, 7% are in default. Auto/retail loan delinquency rate is 3%.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.