With the proliferation of the growth of unsecured debt problems has come a great increaseof debt settlement companies. Much has been written on this topic, just as much has been written about Debt Management Programs, also known as credit counseling. Frankly, some of what has been written has been done to put out propaganda by both sides. What do I mean? Well, frankly, the non-profit industry, which is controlled by the banking industry, has had a vested interest in seeing debt settlement companies go away. They are looking to get all of the debt paid back, plus some interest, whenever possible.
The non-profits would rather not have the competition, yes, they are businesses and please do not let anyone persuade you otherwise. Just like in any other business there are good and bad, and the good ones do serve a vital function. There is much more to debt settlement than just paying back less than you owe in lower monthly payments over time. There is a real psychological benefit to many of these programs, and a real benefit to the bigger economic picture.
When most people are oppressed by a debt problem, it creates an imbalanced emotional situation, and eventually the debt takes over other areas of their lives, Things like work, people relationships, relationships with their children, and on and on. Not to mention, they tend to feel like disempowered failures. It does not matter that the debt has been caused by some unforeseen catastrophe, it only matters that they have lost control.
Many of these people can no longer afford the high payments of a debt management program. The cost of gas, the devaluing dollar all have contributed to this widely expanding problem. Many people can no longer qualify for bankruptcy. What if they can qualify for bankruptcy, but opt instead for debt settlement, and so many people do. Ask yourself, why would a person who qualifies for a chapter 7 bankruptcy, where you get to just walk away from the debt, instead opt for a debt settlement program?
I believe I know the answer. It gives people back control over there bad situation. How so, you ask. Well, when they enroll in debt settlement they are paying back about half of there debt, and doing so in affordable, regular, the key here is regular monthly payments. Yes, it is true that the creditors do not receive any money until a settlement is reached, but that is not the issue. The issue is that the Debtors are once again, establishing disciplined monthly payments and have a financial plan to resolve the debt. They feel better, because they have not chosen to simply give up and file a chapter 7 bankruptcy.
Please do not misunderstand me, there are times when a bankruptcy is the only viable alternative, just as there are times when a debt management program is a best alternative. However, to often I have seen people file a chapter 7 more than once in there lives. In fact, as soon as the statute allows for a refilling, namely 7 years, they are back in court doing it again.
Is debt settlement definitely appropriate for everyone in a debt crises? Of course it is not, but it definitely has its place. . Not to mention, creditors are at least getting back some fair percentage of there money, which cannot be a bad thing for the overall economy.
Written By:
Steven Ciantro
www.americandebtenders.com
Member National Association of Certified Credit Counselors
Help@americandebtenders.com
877-766-2465
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