Debt is an ongoing issue for many American families. Among U.S households who currently have credit card debt, the average credit debt is nearly $16,000. That large amount of debt may be overwhelming for many families, leaving them feeling frustrated and embarrassed to admit they are in over their head financially.
Are you feeling weighed down by your credit card debt and struggling with late payments? The key to getting out of debt is to act to resolve your financial issues and not ignoring the problem in hopes it goes away. Let’s learn about the options available using a debt settlement program and the benefits it can offer you.
Why is Credit Card Debt a Problem?
For many Americans, the credit card debt itself is not the problem, but the interest is. Over time, a low-priced item can end up costing hundreds more, simply because of the amount of interest paid on that debt. Another problem is that many individuals can only afford to make minimum payments on their credit cards. Most of this payment goes to interest, with little or any applied to the principle.
Credit card debt continues to be one of the costliest kinds of debt for many people. Households pay an average of $904 a year in interest alone, assuming an average annual percentage rate of 14.87%. That is money that could go to saving for retirement or a vacation. Many people have credit cards with even higher interest rates and it is common to see people with $20,000+ in credit card debt making monthly payments that are only covering the interest charges and late fees alone.
Is There an Alternative to Minimum Payments?
For many people, paying down their credit cards may seem like an impossible task. Debt settlement programs are designed to help people eliminate their credit card debt and escape this cycle.
What are some of the benefits of a debt settlement program? According to a recent study by the American Fair Credit Council, consumers receive financial benefit from debt settlement program participation. A few of the key takeaways from the study include:
- Debt settlement saves consumers on average $2.64 for every $1 in fees paid
- More than 95% of debt settlement clients receive savings in excess of their fees
- Most consumers see account settlements within 4 to 6 months of starting the program
- These clients typically pay no fees until settlements are completed
These programs can be used as part of a plan to return yourself to financial health. Using these options, you can dig yourself out of credit card debt, leaving you free to use that savings for other financial goals.
What Does Debt Settlement Look Like?
Here’s a quick look of what a debt settlement program involves:
- The debt settlement company will review your income and total debt in order to devise a custom plan.
- You agree to save a predetermined amount of money monthly into a separate savings account that the company sets up for you.
- This money will be used to negotiate settlements on past due credit accounts as you build up the savings.
- Once a settlement is reached on an account, you”ll work with the debt settlement company to either accept or reject the offer.
- Lastly, an experienced debt settlement company will monitor the process until every debt in your program is resolved and all accounts are paid (typically around 50% of the balance).
How Can Debt Settlement Help You?
When you opt to use debt settlement, you are clearing up your credit card debt and doing less damage to your credit than if you opted for a bankruptcy. Additionally, using a debt settlement program means that the creditor receives reimbursement even if it is not everything that you originally owed.
There are specific debts that qualify for debt settlement, including credit card debt, medical debt, personal loans, gas cards, payday loans and furniture store loans. All these types of debt are typically unsecured.
The biggest benefit of using these programs is the ability to improve your credit and return to financial stability. While the settlements may stay on your credit report for up to 7 years, it often only negatively impacts your ability to borrow at lower rates from 2 to 4 years.
If you find yourself in significant credit card debt and are unsure how to resolve your financial issues, contact Effective Legal Debt Solutions for a free consultation. Take that first step towards eliminating your debt and putting yourself in a better financial situation going forward.
The Effective Legal Debt Solutions team is comprised of caring, seasoned professionals with years of industry knowledge coupled with personal real-life experience of dealing with debt settlement situations that many of our clients are facing today.