ANAHEIM, Calif., Jan. 28 /PRNewswire/ -- As credit card companies race to change their fee structures and terms of service ahead of the tougher regulations that will take effect in February 2010, many cardholders are coming out on the short end of the stick: rates are still rising, credit limits are being reduced and a growing list of new fees threatens to drain your bank account one new charge at a time. Ultimately, the already record number of American families facing years and years of payments, fees and penalties will proliferate.
Also expanding is the number of credit counseling services that promise aid to families swamped by credit card debt. For many consumers, unfortunately, this kind of 'help' is making matters worse: extending the length of time it takes to pay off the debt without ever reducing the principal. And according to the experts at Morgan Drexen, Inc., the promise of counseling offers false hope to consumers who forego better, more intelligent alternatives and only delay the inevitable financial crisis that often leads to bankruptcy.
"Credit card issuers encourage consumers to seek counseling rather than debt settlement for one simple reason," explains Walter Ledda, founder of Morgan Drexen. "Credit counseling organizations receive a fair share from card companies. They also get every cent from consumers over time, and do so through a soft collection method they like to call 'Credit Counseling.' But it's not so great for debtors, who get an extended payment period without ever lowering the principal. In many cases, 36 payments become 60 payments, which can extend the misery for cardholders and not improve their personal finances. When it's all said and done, credit counseling is often no better than just making minimum monthly payments… both can lead to the same place: a Catch-22 treadmill from which you can't get off and can't get ahead."
A significant difference between counseling and debt settlement is that settlement companies work for the consumer, not for creditors, and do so with the primary purpose of reducing the outstanding balance. Counselors, on the other hand, operate like a kind of collection agency for credit card companies. "They may sound friendly," says Ledda, "but their goal is to collect the entire principal."
With a good debt settlement plan, the principal is actually reduced, oftentimes as much as 40% - 50%. Consumers can erase the debt in as little as 12 – 18 months and, most importantly, can start building a solid financial future without the scar of bankruptcy. Crucial to debt settlement is the oversight of an attorney to guarantee full legal protection for consumers. With most credit counseling, the only party with an attorney is the credit card company itself.
Ledda explains: "Ask someone who's achieved a good debt settlement, and they'll tell you an attorney-driven plan saved them thousands, helped stop aggressive collectors and got them on the road to financial recovery in two years, or less. Obviously, debt settlement isn't for everyone; but for the vast majority of debt-ridden consumers, it is superior to counseling. Results are better, consumers can pay substantially less than they owe, monthly payments are usually less and consumer rights are fully protected."
About Morgan Drexen
As the nation's first Internet-based provider of accounting, marketing, and paraprofessional services to law firms – including analysis and administrative assistance for debt settlements – Morgan Drexen, Inc., works with law firms nationwide to substantially lower credit card and other unsecured debt, to protect clients from threats and harassment, and to help the law firm's clients build a secure financial future. The company administers the Emergency Direct Assistance Fund (EDAF) for the law firms. EDAF is a hardship program that provides an interest-free, cost-free advance and quickly is gaining national recognition by lawyers as a much needed lifeline for qualified clients who need just a little assistance during their financial struggles in today's unprecedented economic upheaval.
SOURCE Morgan Drexen, Inc.