| Overview | | | | consumer. Classes, workshops and financial planning |
| Credit card debt levels in America are now | | | | tools may be part of the process as well. |
| approaching $952 billion with more and more | | | | Debt Settlement |
| Americans looking for a way out of the debt cycle. | | | | In this case the consumer works with a professional |
| In our parent and grandparent's day credit was the | | | | negotiator to settle, reduce or forgive debts with |
| exception, it has become the rule. The speed of life, | | | | creditors. Often, the arrangement requires immediate |
| the technology and consumer consumption have | | | | settlement of the negotiated balance. If the |
| demanded more options for financing. | | | | consumer does not have this amount available, |
| High levels of credit card debt, in fact the process of | | | | payments are made to the debt settlement |
| applying for high numbers of credit cards, can | | | | company. |
| plummet a consumer's credit score quickly. This lower | | | | Fees for debt settlement will come out prior to |
| of the credit score can result in more difficulty | | | | payment to creditors. The collection process |
| getting a mortgage, higher interest rates and higher | | | | continues during this time. Creditors may become |
| down payment requirements as well as reduction in | | | | more hostile as the payments are not being made. |
| the ability to get high ticket items on credit (such as | | | | Debt settlement, as payments are often reduced will |
| cars, furniture, boats and recreational vehicles). In | | | | have a negative impact on credit ratings. |
| some cases employers will pull credit histories as a | | | | Bankruptcy |
| prerequisite to the hiring process. | | | | Considered the last line of relief for consumers, |
| Credit Counseling | | | | American bankruptcy laws have changed in recent |
| Non-profit and often free services for credit | | | | years. Chapter 7 bankruptcy, where the consumer's |
| reorganization can offer options for the debt heavy | | | | slate is cleared is now more difficult to qualify for; |
| consumer. The credit counselor will take over the | | | | Chapter 13 requires the court to prioritize payment |
| negotiation process with creditors. In many cases, | | | | requires full restitution of the debt, but usually does |
| the credit counselor has access to special discounted | | | | not include interest rates. |
| rates, special relationships and unique offers with | | | | Conclusions |
| creditors. | | | | Each solution creates impact on the credit score, the |
| The consumer may be asked to terminate or | | | | consumer and the future credit options. Careful |
| destroy all credit cards, all debit cards and move to | | | | research, thoughtful decisions and clear commitment |
| structured payment schedule designed by the | | | | to the solution are essential for the consumer to |
| counseling firm. There are often pre-existing | | | | recover from the decision. |
| conditions, standard terms and clear contracts for the | | | | |