Due to the recent economy, millions of consumers, ruined financially by their immense credit card debt, have chosen bankruptcy, as the way out.
But bankruptcy is not always a good choice
Bankruptcy must strictly be the consumer's absolute last option, because:
Bankruptcy, however, is far better than committing suicide over credit debt. There have been reported instances where consumers have chosen to end their life, as a means of escaping debt [ii]. Â If you believe that you may be on the verge of harming yourself, please call the National Suicide Prevention Lifeline at (800) 273-TALK.
Debt Settlement Companies, a costly way out
There is, though, an alternative to bankruptcy due to credit card debt, known as debt negotiation or debt settlement. This is where a consumer negotiates his/her outstanding debt and pay a fraction of the amount owed as full payment. This is also known as debt arbitration, debt negotiation, or credit settlement. Lenders have been practicing debt settlement for thousands of years. However, the business of debt settlement became prominent in America in the late 1980s and early 1990s when bank de-regulation, which loosened consumer-lending practices, followed by an economic recession placed consumers in financial hardships, as is the case today.
Because of the above, Debt Settlement Companies are popping up everywhere, offering to broker the debt negotiation, between the consumer and their creditors, for a fee. However, consumers must be wary of Debt Settlement Companies. Consumers hear their siren song everywhere, whose calling appeal is hard to resist, "Come. We will help you settle your debts for 50 cents on the dollar..." Many consumers have fallen victims to these companies and are often left in a situation far worse than before getting involved with them.
The fact is, these companies cannot do anything for you which you cannot do yourself. Moreover, if you do use a settlement company you are guaranteeing yourself a most difficult journey out of your debt. Regardless of what they may tell you, settlement companies cannot:
Stop the collection calls Protect you against law suits Protect you against judgments Settle your debt better than you canMore over, consumers who join debt settlement companies, quit a debt settlement program with these companies usually after four months, and then file for bankruptcy. The reasons are as follows:
None of these companies address the typical causes of consumer debt: poor budgeting, and/or living beyond one's income. None of these companies has an office where a consumer can receive one-on-one counseling. All contact and business is done via the Internet, fax, phone, and mail. Every month, you send them a monthly payment plan which will be used to settle your debt. Included in these monthly payments, however, are the outrageous fees you will be charged. Debt settlement companies are illegal in some statesAccording to an MSNMoney magazine article[i], the laws regulating debt settlement companies varies greatly by state, but it's worth noting that 12 states prohibit for-profit debt management. Those states are Arizona, Georgia, Hawaii, Louisiana, Maine, Mississippi, New Jersey, New Mexico, New York, North Dakota, West Virginia, and Wyoming. If you live in one of these states, it is illegal for debt settlement companies to contact you and work with you, even if they're based in another state. Now, some of these companies call themselves "not for profit", such as the debt settlement company called Christian Debt Services. Stay away from this company, and or any debt settlement company.
Debt Negotiation on Your Own, The optimal choice
Due to all the above, the optimal course of action, if bankruptcy is in fact avoidable, is to settle your debts on your own by engaging in debt negotiation with your creditors. The fact is, you can easily negotiate your outstanding debt and pay a fraction of the amount owed as full payment. The best part is that you will be in absolute control.  Speaking of consumer credit card debt, below are  the Top 10 States with the highest average consumer debt
How does your debt compare?
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Sources sites: [i] Aleksandra Todorova.August 6, 2007."Debt settlement: A costly escape". [i] May 2010."Debt deception: How Debt Buyers Abuse Legal Systems to Pray on Lower-Income New Yorkers". [ii] "Severe debt can cause depression and even suicide"; http://www.creditcards.com/credit-card-news/debt-depression-and-suicide-1264.php
I am the author of "Get Your Life Back in Six Months | Eliminate Credit Debt". Â This book unmasks man's worst enemy, the credit card industry, and educates consumers of the danger lurking in their wallets. For those in overwhelming credit card debt, the book shows a way out by revealing how you can clear your debt in six months,, through debt negotiation. It is a comprehensive guide on how to defend against collection companies, their frivolous lawsuits, and how to reverse collection company judgments. Â In the end, it also shows how you can still manage to repair your credit report and get a fresh, new start in life.
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