Many folks who struggle with serious consumer debt loads can’t even remember how their troubles began. Credit card debt has a way of building slowly over time.
The slow process of debt accumulation becomes worrisome when it’s repeated multiple times across many different high-interest credit facilities. After all, five credit cards that each carry monthly balances of $2,000 combine to form a $10,000 load of unsecured debt.
The consumer credit bureaus responsible for evaluating your financial profile and issuing your credit score don’t like to see this sort of slowly-building debt. These organizations prefer that you maintain low balances on your credit cards and avoid approaching their spending limits. In fact, they’d like you to keep your total credit use to under 30 percent of your total available credit limit.
If you’ve already blown past the 30 percent mark, you’re not alone. Millions of Americans spend far too much on their credit cards and other unsecured credit facilities.
Unfortunately, your problems will only get worse as you max out your traditional credit cards. With your credit score plummeting thanks to the harsh judgment of the credit bureaus, you may find it difficult to open new credit card accounts. You’ll be shut out of the mainstream credit markets at precisely the moment that you most need the help.
This rejection might drive you into the arms of unsavory creditors that prey upon the misfortunes of the deeply-indebted. As long as you’re willing to pay through the nose for it, payday lenders and “cash advance” stores will always provide you with credit.
It’s painfully easy to become trapped in a cycle of payday loan debt. Compared to your neighborhood payday lender, the typical credit card company looks downright responsible. Payday lenders may charge you the equivalent of 500 percent annual interest on each two-week loan that they extend to you.
If you choose to “roll over” your old balance into a new loan, you’ll pay additional fees and further deepen your debt cycle. Once you start relying on payday loans to cover your day-to-day expenses, you may find yourself staring into the financial abyss.
Regardless of how dark your situation may appear, it would be foolish for you to abandon all hope of mounting a financial comeback. If you give up and declare bankruptcy, you’ll be faced with years of bad credit and curtailed freedom. It may take seven years or more for you to get back on your feet.
You may not need to declare bankruptcy to get your finances back on track. There’s an effective private alternative to the court-sanctioned redistribution of your assets. Known alternatively as “debt settlement” or “debt negotiation,” it may offer benefits for both you and your unsecured creditors.
The debt settlement process may be faster, cheaper and more effective than other forms of debt relief like debt consolidation loans and credit counseling. It involves negotiating directly with your creditors to reduce the combined principal and interest balances on your outstanding debts.
You might be surprised to learn that your creditors are willing to accept less than what you owe on your unsecured debts. After all that your creditors have done to make your life miserable, it may seem strange that these companies would take a potentially serious bottom-line hit to help you escape from debt.
Of course, your creditors don’t negotiate out of sympathy with your financial goals. They negotiate settlements on your outstanding debts out of pure self-interest.
Once you initiate the debt settlement process, your creditors know that you’re perilously close to insolvency. If they refuse to settle your debts, you could be forced to declare bankruptcy. Once that happens, the keepers of your unsecured debts will be lucky to recover 10 cents for every dollar of your original balances.
As a sign of good faith, most of your creditors will stop trying to collect on your debts as soon as you initiate the debt settlement process. Eventually, most will prove willing to settle for a fraction of your original balances.
One of the principal advantages of the debt settlement process is its speed. After all, your creditors want to put your debts to bed just as badly as you do. Depending upon the size of your debt load and the number of creditors involved, your debt settlement case could take just 24 to 48 months.
Your financial future is too important to leave to chance. Talk to a debt settlement provider today to learn more about this powerful process.