Debt settlement is one option available to the consumer as a way out of their financial situation. Debt settlement historically deals with unsecured credit. This unsecured credit can take the form of credit cards, medical bills and any other unsecured debt the consumer has incurred.
The consumer needs to realize there are two types of credit available to them. Secured credit means debt has some type of collateral backing – your home, your car or in some cases, cash secured loans. The other form of credit is unsecured which is normally credit cards from lenders or retailers.
The unsecured credit is where the consumer has caused the majority of their financial problems. The consumer has used credit card to purchase daily expenses, like their groceries, gas, airline tickets, and on-line retail shopping. The credit card companies would offer points to the consumer to purchase items and give them reward points or points toward travel.
So the consumer continued using their unsecured credit cards and making only the monthly minimum payment. This monthly minimum payment was approximately 2 to 3 percent of the monthly outstanding balance. As a consumer, some months we would paid the minimum or include additional monies. This process finally has caught up with the consumers because they can’t afford even the minimum monthly payments in today’s economic climate.
The one way to get out of debt is to look for a debt settlement company. Debt settlement may not be for everyone. It requires the consumer to start saving money monthly until enough monies are available on the lowest outstanding balance credit card before the debt settlement company to begin negotiations.
Yes, there are drawbacks to this approach as there is to other options.
The first step is to discuss with a debt settlement company the ways in which they may be able to assist you out of debt. This is not an overnight fix it may take anywhere from 12 to 48 months. But if the consumer is really wanting to do something and get out of this financial hardship, call us today to discuss your options.
