Eliminating Credit Card Debt – Paying for Debt Settlement Is Not an Affordable Proposition

We have all heard the radio advertisements for debt settlement firms promising to eliminate credit card debt. Unfortunately for the people that hire them, these companies do a much better job of selling their services than they do the job of delivering those promised results.

A typical consumer in debt cannot afford to pay for debt settlement services AND settle their credit card debts with what is left over. It would cost $2250-3000 to settle some reduction of $15,000 in debt. Debt settlement firms advise you stop paying the credit card companies and to start paying them instead. They take their fees out then wait for enough money to accumulate to make lump-sum payments to the consumer’s credit card banks. But, that typically will not happen until after those debts have been charged off and sold due to non-payment.

Debt settlement firms do not deliver what they promise, according to MSNBC. Some banks will not even work with debt settlement firms, according to the Wall Street Journal.

Due to Federal Reserve regulations, credit card companies write off their bad debts after six months. The difficulty is if an indebted consumer cannot save enough money with the debt settlement firm to settle the debt within six months, then they could be faced with bad credit, collection agencies and lawsuits.

Junk debt buyers buy bad debt from credit card banks in large chunks for 10 cents on the dollar. If a consumer has continued paying into a debt settlement program, by the time there is money for a reduced settlement, the original creditor no longer owns the debt. Then it is time to use consumer protection laws like the Fair Debt Collection Practices Act to fend off these parasites, according to the Credit Card Debt Survival Guide. If the consumer is unwise enough to settle with the junk debt buyer, the debt buyer will simply sell the unpaid balance to another junk debt buyer who will resume collection efforts.

Eliminating credit card debt through debt settlement is best accomplished on a do-it-yourself basis. Consumers must be ready to present a need-based case for a reduced balance settlement, according to the Credit Card Debt Survival Guide.

Matt Highlander researched the Credit Card Debt Survival Guide for consumers seeking to educate themselves about credit card debt relief. Matt Highlander is a contributing writer.