Let's face it, the financial recession has forced many consumers into positions that they don't necessarily deserve to be in. With financial hardships setting in, many consumers have to make decisions of which bill they are going to pay with this paycheck this week and which bills they won't be paying. Living through financial hardship has lead many consumers into the thought of using a debt settlement program. But, is this the right option?

Well, depending on the severity of your financial hardship this may or may not be the best option for you. It is up to people to decide what will be best. However, I will go over the debt settlement process and some other options that Americans may have.

The first step in a debt settlement process is contacting a professional. There are thousands of debt settlement companies nationwide. However, it is important to do your research before contacting anyone. Look for good companies with great reputations to help you! Once people have found a company they are willing to work with they will need to call that company.

The representative of the debt settlement company will need to know your total amount of debt and will create a payment plan that consumers can afford. Once the payment plan is created and the Americans agree the process starts. The debt settlement company sends a letter to the charge card companies letting them know that they will be working with the debts and they are working on obtaining a settlement.

This process will last several months and in some cases can last several years. During which time, people will be paying the debt settlement company but the debt settlement company will not be paying the banks until they have one complete lump sum! This lack of payment can have a detrimental affect on consumer FICO ratings.

Once the debt settlement company has saved enough of your payments to offer the bank a settlement, they will offer pennies on the dollar and start the negotiations process. Because the banks haven't received a penny for months or years, they are apt to take a lower amount than what is owed because they think if they don't they will get nothing. At this point a settlement will be negotiated and paid.

Although at this point, the people have no credit card debt left, they also have no ability to obtain a loan. The debt settlement process would have affected the consumer FICO ratings so much, they would have to pay cash for everything.

Another option people have is calling the banks and letting them know that they are facing a financial hardship. Believe it or not, many of these banks are willing to assist consumers with fixed interest reductions to as low as 0%! All it really takes is a simple phone call to the credit card issuers in most cases to get a decent level of relief!

Author's Bio: 

This article was written by Joshua Rodriguez and is brought to you by:
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