Credit Card Debt Relief - Why Debt Negotiation Is The Best Way Out Of Debt

Online, June 23, 2010 (Newswire.com) - Coming off one of the worst recessions in US history there are more people struggling with credit card debt than ever before. The relaxed lending and open lines of credit given over the past decade have been very irresponsible and many American consumers are now trapped in massive credit card debts. In the past, many of these debt-ridden consumers would have filed for bankruptcy. However, new bankruptcy laws passed in 2005 made filing bankruptcy much more difficult so these same consumers are now resorting to other debt relief options.

Many consumers that are experiencing a financial hardship and have at least $10k in unsecured credit card debt are opting for Debt Negotiation Programs . Debt negotiation or debt settlement is where consumers are able to pay back a percentage of their credit card debt and the creditor agrees to forgive the rest. This is typically the last option before filing bankruptcy. Creditors will agree to take partial payment if they believe the consumer is a legitimate candidate for bankruptcy because if the consumer were to declare bankruptcy the creditor would likely receive nothing. 50% of their money is better than nothing for most creditors of unsecured debt.

So how do these debt negotiation programs work?

First of all, everyone who enters a debt negotiation program must make the independent decision to stop making payments to their creditors. This is typically a very tough decision but it is truly the only way to build leverage and get a favorable debt settlement deal. Why would credit card companies settle a debt balance if they are still getting their monthly payments on time? Creditors need to have a reason to settle debts and by going delinquent the consumer is conveying that they are on the verge of bankruptcy.

Instead of making payments to creditors consumers will pay into a savings account until enough funds are built up to reach a successful debt settlement deal. Most legitimate debt negotiation programs can get a settlement deal for 50% of the debt balance over a span of 1-3 years. While results vary case by case, the average debt settlement deal is around 50%.

Using a debt negotiation program for credit card debt relief does not come without consequence. Consumers will experience a short term drop in their credit scores however once the debt is settled it will be much easier to build back due to the more favorable debt to income ratio. The debt to income ratio is one of the biggest factors in a person's overall credit score. Once a large amount of debt gets settled, creditors are much more willing to lend again.

Debt negotiation is a legitimate alternative to filing bankruptcy. If a consumer has over $10k in unsecured debt and is currently experiencing a financial hardship then debt settlement can make financial sense. To find legitimate debt negotiation programs that have proven track records of settling consumer debts then check out the following link:

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