As a result of the economic crisis facing the United States, Congress passed the American Recovery and Reinvestment Act in February 2009. According to recovery.gov, this act has three immediate goals: save jobs and create new ones, spur economic activity and invest in long-term economic growth, and promote accountability and transparency in government spending. Through this legislation, millions of American families will be able to obtain financial assistance through credit card debt relief.
Credit Card Debt
Credit card companies are increasing interest rates, penalty charges and lowering credit limits because of the recession. In an economy where home values are decreasing, unemployment levels are high and the costs of day-to-day living are increasing, many individuals are struggling to make ends meet. As a result, consumers are defaulting on their credit card payments in lieu of putting food on the table, paying medical expenses, trying not to lose their homes through foreclosure or providing basic necessities needed to survive.
Credit Card Companies
Because of the stimulus money, credit card companies are more willing to negotiate financial settlements with individual cardholders. Large financial establishments, where the majority of credit cards originate, are now able to extend leniency to consumers in paying back their unsecured loans. Creditors are using the stimulus money as a cushion to reduce their losses.
Debt Settlement Agencies
Financial establishments are using stimulus money as a way to collect at least some of their outstanding loans. Getting out of debt through a settlement process is very tempting, but you need to make sure you are dealing with a reputable company. The Federal Trade Commission recommends finding out what services a business provides and what it costs. You should get everything in writing, and carefully read all contracts. It is also suggested you find out if a debt relief agency has any complaints on file through your state Attorney General’s office, local consumer protection agency or the Better Business Bureau
It is normally assumed that the larger the amount of unsecured debt, the more likely the financial organization will want to work out a settlement because, even at a large reduction, the bank is still getting a decent amount of money back. You should be able to eliminate at least 50 percent of your debt with the help of a proficient debt elimination agency.
Paying off debt reduces your monthly financial burden, providing more disposable income for the household. Without monthly credit card payments, hundreds of dollars per month are saved on principal, interest and various fees. For some, this can be the difference between financial comfort and bankruptcy.