The consumer knows that loans, bills, mortgages and credit card charges can increase very quickly, in particular the credit cards used for day to day expenses, it is a challenge to maintain the monthly payments.  So in order to safeguard the consumer’s reputation and credit score rating, they need to review and relearn ways to protect themselves.

Some of the things the consumer needs to revisit are the following key ideas:

• Am I borrowing wisely and paying back promptly?
• Have I identified, avoided and recovered from various financial pitfalls?
• Have a gotten a recent copy of my credit report and do I understand it?
• Does my family have a financial plan for the future

The key to being a good credit risk is based upon the consumer’s credit score.  This score is a numerical number assigned to the consumer based upon their credit history. This history is based upon number of opened and closed accounts, payment history, including late or missing payments and collection referral, original credit limit, current balances, etc. The higher your credit score is the better your ability to borrow at more favorable interest rates.  The lower the score the consumer is charged a higher interest rate or decline altogether.

Basically, the consumer needs to obtain a copy of their credit report from one of the following three credit bureaus: Equifax, Experian or TransUnion.  Once you have this report, the consumer needs to set down and review this report for accurate information. 

The other methods which the consumer may consider are:

• Trying to manage their current debt themselves
• Debt consolidation loan
• Home Equity Loan
• Credit consulting
• Bankruptcy

Due to certain financial hardships, the consumer is not longer able to meet their monthly obligations.  This hardship has been caused by loss of job, medical emergency or death in the family. No consumer wants to file bankruptcy since that is the last course of action for the individual and their families. 

Debt settlement is an easier way to resolve the consumer’s obligations.  It is a method by which the unsecured debt is negotiated by a third party with the various credit card lenders. In most cases, the lenders are willing to negotiate a settlement of approximately 50% of what you owe on the obligations.  This is not a quick fix or an overnight process in reducing the consumer debt.  A debt settlement program can take between 12 to 48 months depending on the number of credit cards and the dollar amount outstanding. 

If the consumer is willing to work the program, then debt settlement is a way to proceed to reduce their debt.