subject: Debt Settlement Companies Vs Credit Card Companies - Who Has The Leverage? [print this page] Debt Settlement Companies Vs Credit Card Companies - Who Has The Leverage?
Everyone speaks of settlement companies and credit card dues and debt settlement process and many more things. However, have you ever wondered what is the difference between these two variant of companies. How does a debt settlement firm compare with a credit card company? Who has a better leverage and more popularity? There are several questions which come up in front of the consumers. This article tries to explain the answers to these questions.
A credit card company gives credit or unsecured loans in form of plastic money or credit card. A card company will charge interest to the consumers for using the money. Here the consumers actually borrow the money from the creditors and use the same. They consumer have the leverage to pay back the creditors later. This payment can be done in two ways. The consumer can pay back the money within 30 days grace period where no interest is charged or the consumers can give back the money after 30 days when interest rate will be charged. This means that the consumers will now have to pay more than what they have actually spent. Normally it has been found that the consumers do not pay within 30 days and eventually end up paying more. This is where the debt grows up.
A settlement company on the other hand is not a credit organization even though it deals with deal. A settlement company helps the consumers to get out of debt when the debt grows unmanageably high. There is no interest to be paid by the consumers. Rather, there is a one time service fee which the consumers need to pay. This is not the case with the credit card companies. The credit card companies will charge interest every month on the amount due.
In terms of leverage, there are new government policies which are designed after the recession which helped the debt settlement companies to gain popularity and the consumers are using the help of these companies to get rid of the debts. The creditors are forced to agree for settlement deals by the settlement companies using the threat of bankruptcy and there are government policies which ensure that the creditors agree to such settlement deal easily. Thus, for consumers who are suffering due to enormous credit card bill, the debt settlement companies are the saviors. The settlement companies have a greater leverage here. However, those who are looking for fresh credits, the only option left with them is knocking the door of credit card companies and other credit organizations. Settlement firms never give credit!
With the new FTC laws recently passed, debt settlement is a legitimate alternative to filing bankruptcy. Creditors are ready to negotiate and now you won't have to pay a fee unless your debts actually settle.
