Hello my name is Steve Bis and I've been assisting consumers that are in arrears with their credit cards for a quite some time and understand the effects it has on their lives. When you have credit card debt and know that the situation is out of control, you need to make a decision and make it ASAP. You do not want to put it off until it is too late. As the majority of you already know is that the debt collectors are not helpful when you speak to them with problems with your bill. It's very remarkable the way it works because when you first obtain the card they are the politest people when you are speaking to them. Then if you call them to dispute a late or over limit penalty fee and attempt to have it , they may let you off once a year, if that agent is in a good mood. When it comes down to it what decision are you going to make. It's not like you can stop making payments on your rent/mortgage or other secured debts for your family to survive with day to day expenses.

The credit card industry made upwards of 17 billion dollars in over limit and late fees in 2006 and it will be considerably higher this year. Now I am pretty sure that it has happened to you, where you've gone and open your credit card bill only to discover that your interest has almost doubled or even tripled. It is bad enough trying to keep up with 8% or even the 7.9 % interest that they are charging on your credit cards. How are you suppose to deal with the new payments now? It was bad enough to manage before the interest skyrocketed. This is why many Americans are searching for other options such as debt settlement vs. credit counseling, or bankruptcy. If you are not familiar with any of your options then I will give you a little information on them.

Bankruptcy

Up until late 2004 bankruptcy was to be used for consumers who were experiencing severe monetary problems. Unfortunately it was abused by way too many consumers who were trying to avoid paying their unsecured debts. They didn't want to be accountable for their misgivings. The credit card industry was sick and tired of this so they petitioned to have the bankruptcy laws changed. It is now referred to as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. This would make it more difficult for many consumers to file for bankruptcy. Bankruptcy should only be considered as your last resort option after you have tried every alternative option. Also you should think of the negative aftereffects that will come back later down the road. You would have to find a lawyer, go to court and that would cost you a substantial amount of your hard earned income. There is also the matter of it being on your FICO history for a long time. When you are signing any important application or document you will always have to say yes when inquired about your previous bankruptcy, so this does have a very negative long lasting effect on your ability to obtain future credit.

Credit counseling

Everywhere you look, either on TV or the radio, you will hear about consumer credit counseling. A credit counseling firm will attempt to get the creditors to lower the interest on your credit accounts. You then make one monthly payment to the consumer credit counseling firm and they then pay each one of your creditors for you. The fallback to this option is even though they lower your interest rate on your credit card accounts you very well may still pay back as much as 125% of what you currently owe.

This is because with this sort of program you will still be paying back what you owe plus some of the interest for around 4 to 7 years. Almost 80% of the debtors that are in credit counseling don't complete the program for one reason or another. Another downfall to credit counseling is that if you have a cash flow problem and are cannot make your monthly payment they will kick you off of the program without delay. They will also bump up your interest back up and the creditors could keep you off for at least one year and on some occasions even longer. This could put you right back to where you started from, if not in a worse situation.

Credit Card Debt Negotiation (also known as debt settlement)

This is the method which can save you the greatest amount of money. A good debt settlement company will save you at least 40% of what you currently owe. The 40% should include all the fees as well. As with consumer credit counseling, you will hear a lot of radio and television advertisements quite often. These organizations are popping up all over our beloved country. Some of these companies try to make it sound like they have a magic stick and are going to make all your debt vanish out of nowhere.

There are even many companies that try to use religion to gain the trust of consumers. Whichever organization you are speaking to it is your responsibility to due diligence on them. You should begin with the BBB (Better Business bureau). You may be able to find out quite a bit about a company from the Better Business Bureau. If you soon realize that a company has only been in business for a short time and has a plethora of complaints towards them, then you know to stay away. Another thing to keep an eye out for is how long has the company been around. Some organizations only make it one or two years before they go out of business or get caught ripping people off. Then some of them only stick around to make as much money as they can and close down just to open up right next doorusing a different name.

Steve Bis is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.