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Debt Settlement Provides Relief For More Americans

Written By:
Gina Ragusa
May 03, 2011 at 11:36 PM

Although the great Thomas Jefferson proclaimed, “Never spent your money before you have it,” many Americans have not had that choice in a failing economy.

Today, thousands of people struggle to pay their bills and make ends meet, but in a trying economy, paying every bill simply isn’t a reality for many. With the unemployment rate still dangerously high, more Americans are relying upon unsecured loans such as credit cards to pay everyday living expenses.

Consumers run into trouble when they realize that trying to get by on unsecured loans only runs them directly into debt. The mounting collections calls and financial stress can create depression, anxiety and even health problems if not addressed.

Although some consumers try to keep swinging at their mounting debt alone, others seek debt relief through debt counseling and debt negotiation. A new report issued by CredAbility, says that an increasing number of consumers are paying down credit cards and seeking debt relief to debt counseling, debt settlement and management services.

During first quarter of 2011, credit card repayments are up 9.5% compared to a year ago. CredAbility’s Vicki Williams says. “Many consumers are deciding to take control of their financial lives by working with their creditors to pay down their debt, even if it takes 36 months or longer.”

In face debt relief and debt negotiation is becoming less of a taboo topic and more of a challenge for many. Adam Baker penned “Man Vs. Debt” blog two years ago to chronicle his debt relief story. Baker and his wife paid off their $18,000 in consumer debt, saved $17,000 and reduced student loans by $60,000.

Baker recently took his financial knowledge to the road, challenging cities across the country to start with paying off a $1,000 debt.

"It's my belief that the hardest step for people is to get started, especially when it comes to an emotional issue like debt. The idea behind pledging to pay off $1,000 in debt is that it’s a big number to some, a small number to others, but it’s a number that everybody can achieve if they really focus on it."

With the debt relief revolution upon us, debt counseling and debt settlement has played a large part in consumer success.

How to Find a Good Debt Settlement Company

One hurdle many debt settlement consumers find is how to identify the good ones from the bad. There’s been plenty of negative press about debt settlement companies gone bad, in fact the FTC has taken action against numerous debt settlement agencies across the country.

However, not all debt settlement and debt counseling companies are bad, in fact many can provide true debt relief and keep you from having to declare bankruptcy.

Theodore W. Connolly, bankruptcy lawyer and co-author of “The Road Out of Debt” says, "In general, there are two tip-offs when you first talk to a debt settlement company.” First, "[is] the upfront fee, which should be minimal, and the second is the amount of time they talk to you about your situation."

Experts believe that anything under $75 for an up front fee is reasonable - that’s for non-profit firms. You should not be charged a fee If the debt settlement company is a privately held, for-profit company.

Connolly adds that your first meeting with the debt settlement company should be an in-depth, fact-finding mission where your credit counselor spends ample time delving into your financial background.

Additionally, simply Googling the company to see how long its been in business can give you an idea of it’s a good or a bad one. The longer the company has been in business the better. Scan the Internet for comments made by customers to help you determine the company’s level of customer service.

One Couple’s Struggle with Credit Cards

Sarah and Joseph T. suffered the same fate so many Americans have realized in recent times. The couple was staying afloat while Joseph pursued a college education and Sarah’s job was adequate enough to supplement what they paid for school.

However post-graduation, Joseph was unable to procure work causing a financial strain. The couple had to live off of low interest rate credit cards, which according to Sarah was fine, until those credit card companies were sold and the interest rate went through the roof.

At that point the couple’s debt spiraled out of control so Joseph searched online and found The Freedom Point (now CareOne Services) so the couple could find debt relief.

After completing the paperwork Sarah says that the process of doing business with the company was remarkably easy. “I’ve been through some aspect of this where it’s a nightmare. They want to know every tiny detail that most people don’t remember.”

Sarah recalls that the process flowed and was easy to set up. She liked the how CareOne acted as a mediator between the couple and the credit card companies. “(They) said let’s work something out so it’s not going to kill them (the couple) but everyone is going to be happy in the end.”

Since going through debt counseling and debt settlement, the couple now knows how to stay out of debt. Joseph says, “Before it was a black future, Chapter 13, but after we signed up with Freedom Point (now CareOne) we knew when we would be out of debt and that was very comforting.”

“The best thing I can say is to encourage you to take advantage of the resources that are available to you,” Sarah adds.

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