As more and more people fall victim to the seductive advertising and marketing techniques used by the credit card companies, the amount of unpaid debt owed to such companies is skyrocketing at a staggering rate. The credit card companies have made it extremely easy, almost too easy, to get one of their cards, knowing full well that many people will be unable to pay back the money they’ve borrowed in a timely fashion.
Since most people seem to procrastinate and push off addressing their deteriorating financial situation in favor of obtaining more material possessions, it is not long before the significance of their debt comes crashing down on top of them. The instant gratification that many people unconsciously set as a top priority becomes their demise. This is when people begin to investigate their options for getting out of debt, and many of them eventually end up doing business with a credit counseling service.
Using a debt management or credit counseling service is actually NOT in your best interest. Indeed, most of them will arrange for a single, smaller, consolidated monthly payment from you, which they will distribute to your creditors. However, it’s essential to understand that this is usually where their services stop. It’s important to know that these companies do not actually lower your monthly payments, nor do they reduce your interest rates; they merely contact the credit card companies and inform them that they will be acting as your liaison and sending money every month, despite the fact that these payments are much less than the minimum payment required. From that point, the collection agencies will be obligated to contact only the credit counseling company.
An important fact that most people are not aware of is that any late fees or interest penalties will continue to be assessed, and past due balances will continue to accumulate and be listed on your credit reports. This happens because the credit counselors do not have the power or authority to eliminate such penalties. These credit counseling companies simply insert themselves as a barrier between the debt collectors and the consumers, actually preventing any potential settlement arrangements from being discussed.
What most people do not know is that the majority of credit card companies and collection agencies are willing and able to discuss arrangements that would help the consumer pay off the debt quicker and for less money. Since there is a cost involved for the credit card companies to hire collection agencies, they are usually willing to negotiate different terms directly with the consumer, rather than pay for the services of an outside vendor.
Contacting the credit card companies and collection agencies personally is always the best course of action, and it allows the consumer to demonstrate a willingness to pay what is owed. This is seen as good faith by the creditors, and often results in more flexible arrangements with the consumer. Anyone who uses the services of a debt management company is perceived as having lost complete control of their financial situation.