Rising Credit Card Delinquencies May Aid Your Debt Settlement Efforts
Credit card companies are starting to feel the squeeze. Some of the country’s largest credit card issuers are suffering from large quarterly losses and are watching their credit card delinquency rates rise to historic levels.
According to a recent CNNMoney.com article,
“Credit-card companies will “pull back on growth and aggressively manage credit lines to manage through this cycle,” said Meghan Crowe, an analyst at Fitch Ratings. “Charge-offs will increase. Margins will be squeezed because of higher funding costs, higher provisions and as consumer spending slows down.” The credit ratings company expects an increase in charge-off rates among borrowers with strong credit to hit at least 7% by the end of the year from 6.4% in May.”
Essentially, credit card companies will need to restrict credit limits for some of their customers to help curb future loses. They expect more accounts to go delinquent and expect less revenue from a reduction in consumer spending.
This may lead to a perfect storm for those looking into debt settlement.
According to Charles Phelan, Founder of Manchester Publishing Company and a recognized expert in the debt settlement industry, the current state of the economy certainly does not hurt the debt settlement process.
“It’s business-as-usual in the world of debt settlement, just a whole lot more of it! The banks are settling the same as they have been all year long. In some cases though, there has been some softening, with creditors willing to discuss settlement a bit sooner than they would normally,” said Phelan.
“Collection agencies are finding it tougher to collect in this environment, and some of the bigger agencies are quicker to discuss settlements than they were previously,” he said. “Bottom line: If a consumer is considering the debt settlement strategy, the current financial crisis represents either no news or good news.”
If you are a consumer considering debt settlement, the current state of the economy should not deter you from attempting to eliminate your debt. In fact, it may be advantageous to negotiate with your creditors during a time where losses are mounting and revenue is shrinking.
About the Author:
Chris Rocks is the Founder and Executive Director of the Credit Advisory Alliance (CAA), a membership based organization helping those who have suffered a financial crisis restore their credit and reinsert themselves back into the credit-driven economy. Prior to founding CAA, Chris had successfully helped consumers achieve their financial goals as both a Financial Advisor and the Vice President of a Mortgage Origination Firm.
Post written by Chris Rocks
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to reign in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
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October 20th, 2008 at 6:52 pm
Great post. What are your feelings about settling now versus waiting. With things in such a flux, it’s hard to know if now is the time to settle. Some people I’ve spoken with who are struggling are thinking they can hold tight and get more favorable terms in the next couple of months.
October 20th, 2008 at 7:16 pm
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October 20th, 2008 at 8:32 pm
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October 22nd, 2008 at 12:20 am
[…] Rising Credit Card Delinquencies May Aid Your Debt Settlement Efforts Credit card companies are starting to feel the squeeze. Some of the country’s largest credit card issuers are suffering from large quarterly losses and are watching their credit card delinquency rates rise to historic levels. … […]