Credit card debt settlement can be a much-needed lifeline for individuals, families and small businesses that find themselves unable to continue meeting their monthly financial obligations. This form of debt relief is an excellent alternative to bankruptcy, and in some cases consumer credit counseling and debt consolidation.
There are some qualifying factors to be considered prior to making the final decision regarding the best path for your personal form of debt relief. Below are examples of people who were in a good position, and under the proper circumstances to settle their debt. However, I have also included a few examples of individuals who should not have chosen this route, and ultimately ended up being forced into bankruptcy. Hopefully these scenarios will help you decide if debt settlement is your best option.
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Consumer Credit Counseling wasn't working for single professional woman; instead, she opted for debt settlement..
In May 2007 I was contacted by Denise, a 45-year old single woman, employed as an accountant. Denise had been enrolled in a consumer credit counseling program for the previous 18 months, paying $1,650 per month toward her debt. Unfortunately, rumors at work started circulating regarding cutbacks and layoffs, which led to some panic within Denise, fearful that she would be unable to continue her monthly payments in the event that she would get laid off from her job. Denise decided to take a proactive approach and looked into other options to eliminate her debt, but also avoid bankruptcy, at which time she contacted me. At that time Denise's outstanding balances totaled nearly $45,000. Denise continued to set aside $1,650 per month, in addition to taking on extra work to go toward her debt, as I negotiated with her creditors (Discover, Chase, Washington Mutual, Juniper and American Express). In the end, she settled all of her accounts within nine months. As you can see, Denise's financial situation was one that was conducive to debt settlement. Unfortunately, this was not the case with the following person.
Owner of three retail apparel stores in California was unable to reach her goals due to reduced sales and the closure of two of her three stores.
In September 2008 I was contacted by Jackie, the owner of three retail apparel shops in California. The US economy had begun to decline, but it was not yet to hit bottom for several more months. While Jackie was unable to continue paying her minimum monthly payments on her credit card debt totaling $172,218, she believed that she would be able to set aside approximately $5,000 per month to go toward settling her outstanding delinquent debt. Unfortunately, Jackie was forced to close two of her three stores due to the fact that sales declined so significantly that she could no longer afford the monthly lease payments on these stores. In addition, Jackie was struggling to pay the real estate taxes on her home; obviously, her credit card debt was not her main priority since she wanted to do whatever she could to keep her home. Unfortunately, Jackie's only option was bankruptcy; so, after continuing her efforts toward debt settlement for just four months, she soon realized that this form of debt relief was not going to be feasible for her. Jackie has since hired a bankruptcy attorney and has begun the long and arduous process of Chapter 13 bankruptcy. Unfortunately, debt settlement doesn't work for everybody, but below is an example of a situation that resulted in successful debt settlement.
Small retail business owner was forced to choose between bankruptcy and debt settlement due to slow sales and a significantly reduced income.
George, the owner of a small retail business in Florida was strongly motivated to avoid a bankruptcy filing, but he was no longer able to continue making the payments on his credit card debt, totaling $74,808. Fortunately, George had a small amount of equity in his home and was, therefore, able to obtain a home equity line of credit, which he subsequently used to successfully settle his debt, a total of five accounts with balances owing to such creditors as Discover, Bank of America, AT&T Universal/Citibank and Chase. Again, while debt settlement worked for George, as you will see with the situation below, it certainly isn't a good option for everyone.
Real estate professional desperately wanted to avoid bankruptcy, but in the end it was apparent that this would be his only option.
In March 2008, I was contacted by Steve, a real estate professional, whose business had experienced a significant decline in home sales, thus resulting in a severe negative impact on his income. Despite this, Steve was confident that sales would pick up and he would be able to settle his credit card debt, which at the time was 90 days delinquent, and totaled $99,500.49. Unfortunately, home sales continued their decline; as a result, Steve was barely able to meet even his most basic monthly living expenses. It soon was clear to Steve that, despite the fact that he absolutely did not wish to file for bankruptcy, he had no choice. Just seven months after becoming a client, Steve finally relented and contacted a bankruptcy attorney in October 2008. One more example of a positive outcome awaits you below.
Business professional found himself with overwhelming debt and a large mortgage payment he could no longer afford, as a result of a divorce.
A few years ago I was contacted by Tony, an associate with a leading technology and consulting firm. Tony had recently gone through a divorce and was stuck with a mortgage payment that was much more than he could afford on his salary, which resulted in the short sale of his home. Additionally, Tony was responsible for the credit card debt he and his ex-wife had incurred, in the amount of $106,772. Tony's credit card accounts were approximately 70 days delinquent when he reached out to my office for assistance. At that time, Tony indicated that he would be willing to borrow funds from his 401K, as well as set aside a small amount of money each month to be offered to his creditors. When Tony's debt was finally settled and resolved some 19 months after he first became a client, he ended up paying a total of just $55,215.35 to his creditors, which included American Express, Bank of America, Chase and a local credit union. Tony's final account was settled in December 2008, and he has since purchased a home on a land contract and expects to qualify for a conforming mortgage when his land contract expires in December 2009, as his credit score is currently 639, and is expected to exceed 650 when he applies for his new mortgage.
I can't stress enough the fact that not all individuals, families and small businesses are good candidates for credit card debt settlement; however, if you happen to meet certain qualifications, this can be an excellent alternative to other forms of debt relief. If you'd like to learn more about credit card debt settlement, I urge you to research the topic thoroughly and only hire a debt settlement company that makes its customer service it's number one priority.
Whatever path you choose, I wish you the best
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