With the recession in full bloom or you can say in its entire gloom, delinquent accounts and credit card defaults are on the rise.
A large number of credit card holders have not been able to pay their bills on time and are looking at huge debts to be cleared.
There is no quick fix solution to this problem.
Some users have taken the counseling route.
For those users with limited debt and regular source of income, this is the best option.
They have been able to put their record straight by getting organized in their monthly spending and managing their credit card debt.
Counseling has provided debt relief to a large number of people.
The other group of people is the one with larger than life debts.
These debts are unmanageable and can not be handled by counseling.
Another option open to them is debt consolidation.
Under the consolidation you put all the credit card debt under one head.
So rather than managing four to five cards you will have to deal only with one creditor.
You can negotiate with all your creditors and settle for the one that offers the lowest rate of interest on your borrowings.
If you decide to go in for a debt settlement, the credit card company will be willing to waive almost 50 percent of your outstanding amount in exchange for a lump sum payment.
However your credit will not remain intact.
The record will show that you did not pay up fully and your debt had to be negotiated.
You may find it difficult to obtain loans on lower rates of interest in future.
In fact this remains a major disadvantage of the debt settlement process.
Therefore out of the large number of debt relief methods debt settlement is no doubt effective but can have dangerous side effects.
Take a deliberated decision on the subject.
It is always better to seek professional help.