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Hello my name is Steve Bis and I have been working with consumers that are in debt with their credit cards for a long time and am aware of the effect it has on their lives. When you have credit card debt and believe that the situation is no longer in your hands, you must make a decision and make it ASAP. You don't want to wait until it is too late. As plenty of you already know is that the creditors are not co-operative when you speak to them with complaints with your statement. It's pretty interesting the way it works because when you first get the card they are pretty nice people when you are speaking to them on the phone. Then if you contact them to complain about a past due or over limit penalty fee and try to have it reversed enough trying to maintain payments with 10% or even the 7.9 % interest that they are charging on your credit cards. How are you suppose to afford the higher payments now? It was painstaking enough to manage before the interest was raised. This is exactly why Americans are searching for other options such as debt settlement vs. credit counseling, or bankruptcy. If you do not know much about these options then I will offer you a little bit of an education on them.

Consumer Bankruptcy

Prior to 2005 bankruptcy was to be used for families who were experiencing serious money troubles. Regrettably it was mistreated by tens of thousands of people who wanted to avoid paying their debts. They didn't want to be accountable for their misgivings. The credit card industry was fed up with this so they pushed to have the legislation changed. It is now referred to as the Bankruptcy Abuse Prevention and Consumer Protection act of 2005. This would make it harder for the majority of consumers to file for bankruptcy. Bankruptcy should only be considered as your very last choice after you have considered every other debt relief option. Also you should think of the consequences that very well might come back later down the road. You would have to find an attorney, go to court and that would run you a lot of money. There is also the issue of it being on your FICO history anywhere from 7 to 10 years. When you sign any important application or document you will always have to answer yes when inquired about your previous bankruptcy, so this does have a extremely long lasting effect on your credit.

Credit counseling

Everywhere you look, either on TV or the radio, you will hear about consumer credit counseling. A credit counseling firm will try to get the credit card companies to reduce the APR on your credit accounts. You then make one monthly installment to the credit counseling firm and they then pay each one of your creditors on your behalf. The down fall to this choice is even though they reduce the interest rate on your credit card balances you might still pay back as much as 135% of what you currently owe.

This is because with this kind of program you will still be paying back what the full original balance was plus some of the interest for around 4 to 7 years. Almost seventy five percent of the individuals that are in credit counseling don't complete the program for missing as much as one payment. Another problem 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 instantly. They will also raise your interest back up and the creditors will not let you back on for around one year and sometimes even longer. This might put you right back to where you began, if not in a tougher situation.

Credit Card Debt Negotiation (also known as debt settlement)

This is the option where you can save the largest amount of money. A good standing credit card debt settlement company will save you at least 40% of what you currently owe. The 40% should include all of their fees. Very much like credit counseling, you will hear a lot of TV and radio ads very frequently. These organizations are starting up all over America. Some of these companies try to make it seem like they have a magic bullet and are going to make all your debt vanish extremely easily.

There are also some companies that try to use religion to obtain the trust of people. No matter what organization you are going to use it is your responsibility to due diligence on them. You should begin with the BBB (Better Business bureau). You may be able to uncover quite a bit about a company from the BBB. If you find out that a company has only been in operating for a little while and has a slew of complaints against them, then you must stay away. One more thing to keep an eye out for is how long has the company been around. Some organizations only survive one or two years before they get shut down or get caught with their paws in the cookie jar. Then some of them only stay around to earn as much as possible and close down just to open up across the streetusing 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.