For most Americans, credit card debt is a way of life and being chased by debt collectors is almost par for the course. According to Credit Donkey, the average credit card debt in America is $5,331 with 55% of all card users rolling over card balances instead of paying them off in full.
It is easy then to appreciate why the current outstanding revolving debt is a humongous $1.05 trillion, most of it, credit card outstanding. With credit cards on average charging close to 17% APR, the pressure on most Americans on card repayment is pretty huge and a prime cause for high stress and even bankruptcy.
How to Tackle Debt?
When you have accumulated far too much debt and it is becoming difficult not only to keep track of your card statements in order to make the monthly payments on time but also making the payments regularly is often impossible without taking on more debt, you will realize that you are well and truly ensnared in a debt trap.
A debt trap has multiple negative connotations; you will be forever at the mercy of your lenders trying to pay off huge amounts of interest, your credit score will get damaged due to the over-utilization of the credit ratio and the impact of the missed payments making future access of credit difficult and more expensive.
You are likely to be pursued by debt collection agents and peace both at home and at the workplace may be a thing of the past. You will no longer be able to sleep peacefully at night with the shadow of bankruptcy constantly looming over you.
When you have landed up in a debt trap, the first thing you should do is to take stock of your finances. Find out how much debt you have by making a list of all the balances with the principal amount and interest due and the APR. Establish if you have a net surplus of income over expenses so that you can pay off your debt in a disciplined manner.
If you have a deficit of income over expenses, find out how you can immediately reduce your lifestyle costs. Moving to a smaller place outside the city or even to a different town altogether where costs of living are less, taking the public transport instead of the car, stopping the dining out and partying as well as locking up your credit cards can help. Change your job or get an additional hustle to make more money.
Ensure that you pay at least the minimum amount due on each of your credit cards but if that is an impossible task consider consolidating all your debts and starting afresh with a clean slate.
How to Choose the Best Debt Consolidation Company?
Debt consolidation is a fairly straightforward process, but most people prefer it to be handled by a professional company. However, the debt consolidation industry is pretty much unregulated and there are lots of unscrupulous companies waiting for a chance to rip off an unsuspecting customer. This makes it essential for you to ensure that you associate with a completely professional and ethical debt consolidation company like National Debt Relief.
Some tips on what you should be looking out for:
Accreditation: There are plenty of unscrupulous companies that will rip you off with high rates of interest, advance fees, and surprises in the fine print. It is very important for you to identify a debt consolidation company that is reputed and has the right credentials. Ideally, these lenders should be accredited with the Association of Independent Consumer Credit Counseling Agencies (AICCA) or the National Foundation for Credit Counseling (NFCC). Also, check if the company is accredited to the Better Business Bureau.
Recommendation: Ask family and friends to recommend a good debt consolidation company that they have used themselves. Recommendations by those you trust are invariably among the best ways to identify a company that you can rely on.
Consumer feedback: Rather than relying on the testimonials posted on the websites of the companies that generally speak well of the services rendered, you should go online and check out the complaint boards and find out what sort of a rating they have got from actual customers. No company will emerge completely blemish-less, however, if the majority of the customers seem to be happy, it is a good indicator. Watch out especially for reviews that complain about high rates of interest and high fees and charges taken in advance.
License: There are many states that require debt consolidation companies to be licensed. Some states even mandate that the consultants are also qualified and licensed. Before signing on the dotted line, you should check whether your state has such a requirement, in which case, you should check if the companies you are looking at meet the licensing requirements.
Upfront fees: It is better to avoid companies that demand upfront fees from you under a variety of names to process your application for debt consolidation, as under the law, it is illegal for any company to demand fees without rendering the service first. Not only should you refuse to pay any upfront fees but also it is better to avoid working with these companies, as usually, they will scam you.
Written contract: Before committing yourself to pay any money to the debt consolidation company, insist that they draw out a comprehensive written contract that clearly specifies the rights and obligations of both parties. Do not take any verbal assurances at face value because they are legally unenforceable. Never sign a contract or any other documents without reading them very carefully. If you do not understand something, ask them to explain it properly.
When you are mired in debt and constantly worrying about how to get on top of it, the last thing you want is to be taken for a ride by an unscrupulous company pretending to be a genuine debt consolidation company. It is very important to be circumspect and not rush into something because if you are being offered a deal that is too good to be true, it invariably is.
Sign up with an established and reputed company so that you can be sure that they will assist you to become debt-free in due course of time.