Why Settle Your Debt?
Why Settle Your Debt?
Why Settle Your Debt?
According to The Survey of Consumer Payment Choice, Federal Reserve Bank of Boston, for January 2010, the average number of credit cards held by cardholder, as of year end 2008 is 3.5. And according to the Federal Reserves 2001 Survey of Consumer Finances -"Only about 1 in 20 American households owes $8,000 or more on credit cards and most households that carry balances owe $2,000 or less."
According to the Survey of Consumer Payment Choice," Federal Reserve Bank of Boston, January 2010, the mean, or average, unpaid credit card balance last month was $3,389. The median is $90. And Experian marketing insight snapshot, March 2009 says that the average balance per open credit card (including both retail and bank cards) was $1,157 at the end of 2008. That's up from $1,033 at the end of 2006, a growth of nearly 11 percent in two years. (Source )
If you have a $5,000 at an 18% interest rate and are paying about $200 a month, minimum, how long do you think it would take you to pay it all off? -- 11 years. And that's assuming that you have stopped charging on your cards. In those 11 years, the $5,000 you owe would actually balloon to $7900by the time you've paid in full.
And what if your total credit card debt amount is double that amount, $10,000? If you pay the minimum payment, it would take you 22 years to be debt free.
But don't despair, the good news is, you have the option of settling debt with your creditor. It used to be that they are not open to being paid with less than the full amount, but since the recession, they have gotten wiser, and depending on the negotiation, are now settling for less than the full amount.
Debt settlement can be done d.i.y. (do it yourself) or via a debt settlement company. You would save on fees if you do it on your own but you may be compromising the opportunity to settle for the best possible percentage. Remember that debt negotiators know your creditors. All of them and are therefore familiar with their business temperament.
If you're wondering just how much a professional debt settlement is going to cost you, the industry standard is 15% of the total debt amount or 20-25% of the settlement amount. As for the fee structure, you should be glad to know that as of October 2010, debt settlement companies are not allowed to charge upfront fees anymore or charge any fees, without having settled anything yet.
So, if you are already burdened by your huge credit card balances and they are past due too, now is the best time to try debt settlement, and be debt free in less than three years.
http://www.articlesbase.com/debt-consolidation-articles/why-settle-your-debt-3556633.html
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