Credit Card Debt Settlement and Debt Management Do Not Work for Most Indebted Consumers

Mel Thompson of www, examines issues around indebted consumers who cannot afford to pay their credit card debt work through non-payment to get control of their finances.

What happens if a consumer cannot afford to pay their credit card debt without sacrificing monthly essentials likerent/mortgage, food, utilities, health care, or children’s clothes?

Typically, they first attempt to make reducedpayments into some kind of consolidated debt management or debt settlement plandepending on the type of debt relief professional that counsels them.

Many credit counselors pointconsumers to debt management programs with the best intentions, while others doit for profit motives.  But according tothe Federal Trade Commission (FTC) “it could take 48 months or more tocomplete your [debt management plan] DMP.” Mel Thompson, author of the credit card debt blog, asks,“If consumers are in this type of program because they could not afford to paytheir debts to begin with, then realistically how can they be expected tocomplete a four-year payment plan?”

The statistics on howmany debtsettlementand debt management plans are actually completed appear to be closely guardedsecrets, says Thompson.

Debt counseling professional organizations and thelarge debt settlement companies do not make them public.  According to Thompson, the general consensusamong consumer advocates is that no more than 20 percent of these programs areever completed. That means that 80 percent of indebted consumers enrolled inthis programs waste precious dollars on fees and principal that get eaten up bycreditor penalties and interest.

The National Consumer Law Center has called forstricter state laws governing credit counseling and debt management plans.  The Credit Card Act of 2009 limited theupfront fees debtsettlementfirms could charge, but it does do not deal with the basic problem of sellingindebted, unwitting consumers on debt settlement plans they cannot afford, saysThompson.

According to Thompson, the simple solution tounaffordable credit card debt is for consumers to selectively not pay thatunsecured debt so they can focus on paying for their monthly essentials.  Just like he did, Thompson says everyone canlearn how to properly respond in writing to debt collectors and junk debtbuyers.  He also explains that there areaffordable consumer rights attorneys available for indebted consumers who needto respond to a debt collection attorney. And finally he adds, “Bankruptcy should be the last resort, not thefirst solution for credit card debt, because the last thing a collection entitywants to deal with is a debt-educated consumer.” focuses on helping indebted consumers who cannot afford to pay their credit card debt work through non-payment to get control of their finances.Nonpayment of credit card debt isexplained all in a series of blog posts with links to various crediblemainstream websites that back up these explanations. Detailed credit-card-debtinformation products are available on the site. In addition consumers can take advantage of the free ebook offered onthe website– 3 Simple Steps to DefeatDebt Collectors the Next Time They Call.

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