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Credit and the mighty credit rating are two very important tools in the world of today. If you have a good credit rating you can get what you want: credit card(s) of your choice, rental property, financing, etc. Unfortunately, if you don’t make your payments, the consequences are harsh. Your creditors will report you to various credit bureaus and once you’ve lost your good rating, it becomes difficult, even impossible, to get more credit.

Driven by the notion of instant gratification, American consumers’ pursuit of the “good life” has placed them in over $2 trillion in debt- $800 billion of it being credit card debt. The average American household is in some $8,000.00 in debt and about 43% of American families spend more than they take in. The majority of consumer borrowing, about 63%, is represented by “non-revolving” debt such as automobile loans, or mortgages. Revolving credit, which consists mostly of credit card debt, is an increasing part of the consumer debt problem. Revolving debt currently totals around $735.30 billion-more than double the amount a decade ago. This near financial epidemic has given rise to predatory lenders and advertising bombardment from an industry that handles bankruptcy, credit consolidation, credit counseling, and debt settlement. When addressing consumer debt there are five main options for help- credit counseling, bankruptcy, consolidation loans, do-it-yourself methods, and debt settlement. Welcome to the industry of consumer debt relief.

A Consumer Advocate specializing in Debt Collection Practices can be an effective option to help you get through the credit collection process. Consumer Advocates or Unions are set up to act as a layer of protection between you and the creditor/collector once your debts fall behind. Most Consumers Unions were formed by experienced professionals from the Debt Reduction, Credit Counseling, Student Loan, Mortgage, Credit Card, and Collection Industry. These groups were created in response to abusive creditor collection techniques used against clients involved in Debt Relief Programs. Realizing first hand that most clients have little knowledge of their rights and are ill equipped to handle collection harassment, the Consumers Union was designed to help debtors stand up to the creditors. Most Consumer Advocate’s help their clients through a combination of client Education and Protection.

Debt Settlement as a means of debt relief can be extremely advantageous for consumers struggling with meeting the minimum monthly obligations (payments) on credit cards, unsecured loans and medical bills, etc. As with all things in life one needs to make sure they are pursuing the correct option for their specific needs. When considering using debt settlement as a form of debt relief it is important to make sure you have a legitimate hardship. If you enter into a settlement without a solid hardship you may find that the program is not as beneficial as once originally thought. Creditors will and do accept settlements on a daily basis. Obviously, this is not something they are eager to advertise to potential clients as well as the ones they have already attained. It is important to note that Debt Settlement is designed to reduce debts that the client deems valid. Debt Relief usually cannot help if you are disputing the debt or believe that your circumstance and reason for accumulating the debt are unjust. In these cases it is wise to consult the professional advice of an attorney to represent your claim, rather than accepting the damage and or debt with the hopes of negotiating a settlement by employing a debt negotiation company. Again, for the settlement to be reached it is imperative to have a legitimate hardship. So, if you have just gone to the local electronics store and purchased the latest and greatest that Silicon Valley has to offer with intentions of entering into a debt settlement program not only could this be considered fraudulent activity, but you may also find that most settlement companies are unwilling to work on your behalf.

If you have determined that using a debt consolidation company is a good idea for you and your finances, how do you choose one wiselye

Different Types of Debt Consolidation Companies

A debt consolidation company can help you in various ways. The first thing that they will do is take all your existing debts and combine them into one ongoing payment. What happens next is up to you. You might decide on any one or more of the service options they offer. The best thing to do is to get out all your paperwork concerning your debts and look through them carefully. Decide which debts are the most problematic; then see which of the following options would help you the most: