If you are in debt and pay only the minimum payments on high interest debt you should already understand that you are spinning your wheels and are going to take forever to pay off your balances. The minimum payments are designed to keep you in debt. Your creditors are sharp, they are looking for the absolute highest return on their investment and structure your minimum payments to simply pay the interest and barely scratch the principal. They continually monitor your credit reports to offer you increased lines of credit so they can get you right where they want you; paying only the minimum payments. This will get you nowhere. Paying more then the minimum payments and not using additional credit are the sure way to eventually get out of debt. If you are unable to do this then you must explore your alternative options to free yourself from this burden.

Consumer Credit Counseling (CCCS) or "Non-Profit"

The consumer credit counseling services industry or C.C.C.S. was a popular form of debt relief for many years. The C.C.C.S. industry took a nose dive after many misleading companies like Ameridebt took advantage of consumers by promising the world and not delivering anything but problems. Consumer Credit Counseling Service Companies advertise that they work with your creditors to reduce or eliminate your interest rates, consolidate everything into one easy monthly payment and get you out of debt in 12-48 months, when in fact they are actually working for your creditors and are getting paid what is referred to as a "Fair Share Contribution". A "fair share contribution" is a percentage of your monthly payment which is paid to the C.C.C.S. Company for their efforts. Many of these companies are considered "non-profit" for that reason, which is technically called 501 C-3 Status. The non profit status does not mean that they do not make profit; it is merely a choice of words and a legal loophole that blankets them from paying many of the taxes most companies have to pay.

Credit counseling does work for many people if you enroll creditors that are willing to reduce interest and pay a fee to the CCCS Company. The trouble lies in the fact that when you submit your creditors and debts to the CCCS Company, many of these companies do not let you know who will work with them and who won't. So the creditors that refuse to reduce interest or bring the accounts current are basically left behind for months without you knowing, which may have a snowball affect on your entire financial situation.

Common problems that we have found with CCCS are..

• Misleading information about all aspects of program
• CCCS company making late or missed payments to creditors
• Under quoting payment amount at time of enrollment
• Horrible customer service
• Creditors not willing to work with CCCS company

We do not recommend C.C.C.S. unless you have exhausted all other available options. In addition we always recommend you research any company thoroughly before enrolling.

Debt Settlement or Debt Negotiation

Debt settlement commonly referred as debt negotiation is an old concept but is becoming more and more commercialized and popular for people that are burdened with unmanageable debt situations. Debt settlement means: paying a creditor less then the amount owed by negotiating the balance.

Debt settlement is only possible with debts that are seriously delinquent or in collections. The reason for this is, once a debt is seriously past due or sent to collections; the creditor has already charged the debt off. You see, for most creditors when a debt is past due, there is a specific process in dealing with the debt. They will add late fees, over limit fees as well as excessive finance charges. Once the debt has increased due to the account status, the creditor will look for ways to reduce their loss. The second step is for the creditor to charge the debt off. This means that the creditor believes the debt is uncollectible and the creditor no longer wants to pay taxes on the debt as an asset for the company. So when the creditor charges the debt off, they get a tax break. At the same time they are now restricted form attempting to collect the debt, so usually they will sell the debt to a third party debt collector. Once the debt has been sold, the new debt collection agency will attempt to collect the debt. If they are unsuccessful, chances are it will be sold again and again until they are successful. After the debt is sent to collections you have a much better chance of settling, that is if they don't sue you. Many creditors and collection agencies would rather settle then sue because it is much more cost effective. Even if they sue, they still need to collect which leaves them in the same situation. The older the debt is, the more likely it is that they will settle.

Beware of bad debt settlement companies. Every industry has its share of bad apples and con artists, the debt industry even more so. Many predatory companies prey on vulnerable and desperate people looking to help their situation and only end up with far worse problems. We have had reports of debt settlement companies doing many unscrupulous things to their trusting clients from giving misleading and inaccurate information to taking payments intended to settle accounts and just keeping the money.

If you have unsecured debt that you are wanting to settle, you may want to consider calling us for a free debt analysis consultation.

Bankruptcy should be considered a last resort if all else fails. Bankruptcy is a federal court process that can help consumers eliminate overwhelming debts. Depending on your circumstances and income, bankruptcy laws may give you a way to "wipe out" and erase many financial obligations and start over fresh so to speak. Be careful, even though bankruptcy may help the debts go away; it may very well have an extremely negative impact on your ability to obtain credit, get a job or insurance, a bank account or apartment rental.

Individuals may be able to file one of two types on bankruptcy:

• Chapter 7 = Liquidation
• Chapter 13 = Repayment


In Chapter 7, the bankruptcy forgives most debts that are not secured by assets or property (Ex: House or Car). In addition, you are allowed to retain certain exempt assets under Chapter 7, a court appointed trustee takes possession of your non-exempt property, arranges for it's sale or liquidation and is responsible for paying as many or as much of your debts as possible with the proceeds. Not all debts can be discharged by bankruptcy.
Chapter 13, sometimes referred to as "wage earners repayment plan" bankruptcy may be your only choice if the court determines you have the income to repay your debts. Filing for chapter 13 bankruptcy allows you to pay your debts in installments over an agreed upon time period, usually 3 to 5 years. The court must approve your plan to pay all or part of your debt. If you need to file and you want to keep property, like a house car or boat; you may want to consider Chapter 13.