Debt Consolidation Or Debt Settlement - Which Is Your Best Bet To Beat Deep Credit Card Debt?

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Author: Jennifer Wilson

Article source: http://www.articlealley.com/. Used with author's permission.

In today's unstable economic times, millions of Americans are being forced to make a tough decision; feed the children or pay their credit card debt. Of course, basic necessity comes before paying bills, so they put off their debts and slip into a financial crisis. The late fees begin to pile sky high, the phone starts to ring off the hook and letters begin arriving threatening legal action.

What began as just a few late payments quickly escalates into an economic catastrophe. Unfortunately, this is where very costly mistakes are often made by millions of households every year. They are desperate for a quick resolution to their credit card debt problem, and act upon the first viable option presented to them without fully exploring all of their alternatives.

Sadly, the first thing they do is call a consumer credit counselor who promptly instructs them to consolidate their credit card debt to ease their financial strife. The family is desperate for any kind of debt relief, so they hastily make the call thinking they have made a smart decision by consolidating. But the reality is, they are digging themselves in an even deeper hole by using a credit card debt consolidation service.

Why, because a credit card debt consolidation service increases overall debt by charging fees for their services and by extending the pay off date for the family's credit card debt. Extending the pay off date increases the length of time interest must be paid, and can cost thousands more than necessary.

Debt Settlement programs on the other hand, negotiate directly with creditors to cut the actual balance of the credit card debt owed by the consumer. In most cases, they can cut the balance by 50% or more. This significant cut to the bottom line saves thousands of dollars and years off of the life of the credit card debt repayment contract.

Debt settlement programs are focused around hardship circumstances. Consumers must meet hardship qualifications such as illness, injury, divorce or loss of income to be eligible. Debt settlement agents negotiate a reduced credit card debt payoff balance based on your hardship situation. Creditors accept this offer to collect a reduced balance because they are at least able to collect a portion of the debt owed to them, rather than have to accept nothing if the consumer files bankruptcy.

Jennifer Wilson is the author and webmaster of CreditRepairGurus.com where she offers credit repair insights about how to cut your debt by 50% and avoid bankruptcy using highly effective debt settlement programs to eliminate credit card debt.