I have been in the credit card debt relief industry for just about 10 years now and have been in the financial industry for over 20 years. The point of this article is to give people a heads up on debt relief companies also known as debt settlement or debt negotiation companies. I will give you the pro’s and con’s of this process and what to watch out for when interviewing a company to help you get out of debt. Before I go on I want to let you know that this will be a rather long article and by the end of it my goal is to have you understand how the debt negotiation/settlement process works in case you don’t already know and I would like you to understand the tactics of companies out there that do not truly have your best interest at heart.

First I would like to state that the process of debt negotiation as your means of consumer debt relief is not for everyone, some people are better suited for bankruptcy and others do not have the correct mindset to go through this process.

I would like you to first understand what debt negotiation is and how it works. The goal of a debt negotiator is to obtain a debt settlement for you on the current debt amount you owe your creditor. So for example you may owe one particular creditor $10,000 so the goal of the negotiator would be to have you end up paying back say $6,000. The two main benefits of going through this process are to save money on what you currently owe your creditors and to save time. By just paying the minimum payment with even a modest interest rate you will be looking at 30 or more years to become debt free, with a sound debt negotiation program you will be out of debt within 2-3 years or sooner depending on your current financial situation.

Now you must understand these are great benefits but as with anything in life there are drawbacks, nothing is perfect and this consumer debt relief procedure is no different. For starters your creditors will not be willing to negotiate a debt settlement at all if you are current with your monthly minimum payments. They would prefer you to stay on their credit treadmill for the next thirty years and pay them back over four times the balance in interest alone. So you must fall behind on your payments to put the creditors into a position where they will be willing to settle. Once you stop paying them the ball game changes completely and they will then be willing to talk in terms of negotiating a settlement.

So obviously for some people the beginning of this process will have a negative effect on their credit score. For those who are already falling behind then the negative effect will be no different than it already is. Unfortunately for some people this will be the deterring factor that keeps them from going into debt settlement making them a slave to their creditors for the next thirty years. The good news is that this negative effect does not last forever, in fact once the settlements start coming through your credit score will begin to rebound and go back up. The reason being over 30% of your credit score according to MyFICO is based on how much debt you owe. But if you are stuck in a bad debt situation even if you are current with your payments your score is probably not all that good in the first place, and besides when stuck deep in debt your focus should be on how to get out of debt as quickly as possible, not on your ability to accrue future debt.

Now by falling behind on your debts you must understand that these creditors are just not going to roll over and play dead, they will be calling to try and collect the debt. For some this is not a problem at all, for others it is, that is why I stated above this process is not for everyone and the consumer must be in the correct mind set. From my years of helping people there is no rhyme or reason to how many calls you will receive some clients of mine barely get calls while others get them almost everyday. Something to keep in mind too is that no company has the power to legally stop the calls, so any company that tells you they can is flat out lying.

As you can see like I said earlier there are pro’s and con’s, but if you can accept the con’s you will be quickly on the road to financial freedom and will save a lot of money in the process. Now to get to the meat of the matter and why I named this article “consumer credit card debt relief scams”.

We here in America over the past couple of years have been experiencing a very negative downturn in our economy. Thus putting many consumers in a compromising position financially, leaving boat loads of people stuck in credit card debt. So naturally this opened up a much larger market for debt negotiation. Many fly by night companies have been popping up all over the country, many of which are ex mortgage brokers who sold people bad loans and helped them get into this sticky position in the first place. Now I use the word scam which can take on a few meanings, while yes there are some companies out there that are flat out scams and have no intent on doing any work for you at all, most of the times that is not the case. Instead many companies simply do not give people all the facts on how debt negotiation works nor do they truly put them on a plan for success, which I will explain in a minute.

One common issue that most consumers have with debt settlement companies is they do not fully tell them about how the process works, instead they sugar coat things and just preach about the great benefits. I have spoken to countless amounts of people who have signed up with companies and were under the impression that they were going to stay current with their creditors and will never receive any calls. So needless to say this became a huge problem once they began.

Another major problem a lot of these companies have is deceiving people into the kind of savings they will be getting on their debts. Some companies will say they will save you 70% of what you owe. Now while they may get settlements that low what their opting not to tell you is how much you will be saving after you have A) paid them their fees, and B) paid back the creditors. Honest companies will tell you what your true savings will be. If you will save somewhere between 40-50% of what you owe including their fees and paying the creditors than that is pretty darn good. Plus many of these companies will try and guarantee a certain amount of savings, if you hear this run for the hills. NO one in this industry can guarantee a certain amount that is why it is called DEBT NEGOTIATION! They are negotiating to get a settlement for as low as they can get.

Then there are the companies who will let you pay whatever you can to get on their program. These are the worst because they do not truly have your interest at heart and know they are setting you up to fail and not succeed. You must understand to achieve the type of savings I stated above this process should take no more than three years, preferably two or less. And the bottom line is some people simply cannot get it done in that time frame and should realistically be looking into bankruptcy. What these unscrupulous consumer debt relief companies will do is put you on a program for 4 or more years and basically accepts whatever payment you can afford. Knowing full well you are not going to be saving much of anything and will more than likely fail off the program, all they care about is getting the fees and that is it. An honest company will diligently review your budget with you and make sure this is something that you can manage, as well as fully explain to you both the benefits and drawbacks of doing this. And let you make the conscience decision as to whether this is the best consumer debt relief method for your situation.

Another very good way to evaluate a company is to make sure they are registered with the BBB (Better Business Bureau) and that they are in good standings with very few complaints. And if there are complaints make sure they were resolved to the clients liking.

Debt relief has to be a concern of yours if you are unemployed because bills continue to come in the mail whether you are working or not. If you do nothing you may end up losing everything that you have worked so hard to get. You may not think so but there are things that you can do.

What can you do about debt if you don’t have a job?

Because of the economy this is an all too common problem. Your debt continues to grow while you try to find work. The stress and the worry builds till you can’t take it any more.

o The first thing that you should do is to thoroughly examine your finances. See if there is anything in the way of expense that you can cut out. Eating out can really eat away at your expenses, try cutting back on that. Think hard is there anything else? If there isn’t then you are doing better than most.

o Is there anything that you can sell to make some money? When times are hard you have to make tough decisions. Everyone has something around the house that they no longer need, why don’t you get rid of it and make some money at the same time. eBay is a wonderful outlet to get rid of stuff that is just cluttering your house.

o A debt consolidation loan or a second mortgage might be worth considering.

o But probably the best thing to do is go to the Federal Trade Commission website. There is a wealth of information there for people like you that need direction in a troubling time.

o Under the section Facts for Consumers there is quite a bit of valuable information on what is available to you in the way of debt relief.

The US Federal Government credit card debt assistance plan was a design to help educate Americans on credit card debt and the necessary steps it takes to get out of debt as quickly as possible. Many card holders are looking for help in 2010 as they have dug themselves a huge hole through the recession. Unfortunately, many Americans made large purchases on cards and it has been a struggle to pay these credit cards off.

President Obama and his staff have worked very hard to (more…)

With the recession that hit the nation in the past few months, the ability to clear debts had hit an all time low. The economy is picking up but there are situations where recovery is taking place slower than hoped. This is where Debt Relief Government Grants come in handy. Not many people know what these are and for those that do, believe that it is some kind of myth.

So what are debt relief government grants? These are the billions of dollars set aside for the purpose of debt relief for the common citizen. The main problem is that not many people that need it are aware of it but it is easy to get one. These debt relief government grants are offered to those that do not have the ability to settle their debts for one reason or the other.

One would most definitely wish to know how they can benefit from the government grants. One can hand in a proposal for a business or income-making ideas that will get the government’s interest. The idea is to give money to the public to begin income-generating projects that will enable one to settle their bills and debts. It is also given to those that need to settle such bills as medical and hospital bills. It also helps in avoiding home foreclosures or even the need to declare bankruptcy. It is important to write a proposal that will benefit you. Be sure to train or research on the best kinds of proposals to write and in that way be assured of debt relief approval

The advantage with government grants for debt management is that it is NOT a loan. This means that collateral does not have to be placed against the amount taken, one does not have to pay it back and most importantly be able to prove without any reasonable doubt that they cannot settle their outstanding bills and debts.

Debt relief companies come in many shapes and forms. The way to know the best is that they are mostly non-governmental organizations. They also should do a thorough background check of your financial past and should have a successful history of debt settlement and relief. These companies charge for their services so it is important to choose a credible one or else one can lose a lot more than the initial debt situation. There are also different tools to make the application for a grant a easy task.

Credit counseling can be of great help for those who have to shoulder a lot of debt. An overwhelming amount of debt can make your financial situation troublesome and this where you can use some advice from a credit counselor. There are various types of debt relief options offered by various credit counseling companies. Some services which will be commonly available with all counseling agencies are financial budgeting advice, negotiation with the creditors to restructure a new payment plan for the consumer which will be lower than what the consumer in paying currently. As all debt relief process enrolling with a credit counseling service has its own advantage and disadvantage. Here we will be highlighting the benefits of credit counseling and the disadvantages that you have to keep in mind before signing up for such a program.

Advantages of credit counseling:

1. Credit: One of the biggest advantages of this method is that it helps the consumer to avoid bankruptcy and hence retain a better credibility in the market. Bankruptcy stays on the credit report for 10 years and getting credit during this period is difficult for a consumer.

2. Financial: This method helps a lot of consumers to save money as it helps them in waiving off administrative and late fees from the account and it also helps the consumers to negotiate a lower interest rate from their creditors.

3. General: When a consumer is represented by a credit counseling agency then the creditors are willing to work on a repayment plan and other alternatives which can help a consumer to get out of debt through their own means.

Disadvantages of credit counseling:

1. Credit rating: If a consumer just goes for a free credit counseling session it will not have an effect on his credit rating however, if they enroll for a debt management program then it will be noted on their credit report which will stay for 7 years. During this period some creditors might not be willing to lend money to that customer.

2. Financial: A consumer might have to pay the counseling agency a monthly fee. This amount can be a burden if the consumer was working on a very tight budget. However, there are non-profit making agencies who will not be charging you a fee for their service. You could be saving the fee amount. Hence it will be preferable to chose a non – profit organization to a profit making organization.