The question of the day is? “How am I going to continue making my monthly minimum payments?” As a consumer I am now faced with some unusual financial situations. I might have lost my job, had my salary reduced, got divorced, or had a medical emergency. Because of one of these financial hardships, I am barely able to maintain my monthly mortgage and car payments along my other monthly obligations.
The consumer is about to get hit with another increase on their monthly minimum credit card payments. In the past, the consumer has been paying the 2 percent minimum monthly payment, it would take years to just payoff their current balances. So at the direction of the federal government, most credit-card companies are increasing the amount of the consumer minimum payment from 2 percent to 4 to 5 percent. The good news is in a good economic or without financial hardship by paying a higher monthly payment you’ll pay off your debt more quickly. The bad news: Your now have the additional burden of coming up with more money each month.
Faced with every increasing pressure to get out of debt, the consumer is now more willing to consider a debt settlement program. The average consumer wants to pay off their credit card obligations, but the lenders are not willing to work with the consumer by either reducing the interest or establishing some type of revised lower repayment plan.
Therefore, the consumer is let with no choice but to consider either bankruptcy or a debt settlement program. Yes, there are other options available, a home equity loan or a debt consolidation loan from a lender. However, because of consumer’s financial situation these options might not be available.
The debt settlement program is a better option than bankruptcy for most consumers. If a consumer is considering bankruptcy they should consult an attorney before taking this step. Whereas a debt settlement program will allow a third party to negotiate on behalf of the consumer for a settlement of up to 50 percent off their current outstanding balances.
This is not a quick fix or easy step for the consumer. This program can take been 12 to 48 months depending on the consumer’s obligations. Basically, the program requires the consumer to place a set dollar amount aside each month into a “trust/escrow” account. Once there is at least half of your lowest credit card balance, then the debt settlement expert will start to negotiate with your lender. The key to this program is that the lenders are more likely to accept some monies from the consumer than receiving nothing from the consumer if they file bankruptcy. Under bankruptcy, normally the secured lenders receive their monies first and in most cases the unsecured lenders receive up to little or nothing. By receiving nothing, the lenders have to write this off as a loss or bad debt on their financial statements.
