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Rising Credit Card Delinquencies May Aid Your Debt Settlement Efforts

Created: On October 20, 2008 @ 4:53 pm In

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 [1] 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 [2] 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 [3] 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.

Article printed from DebtHelp.com Blog: http://www.debthelp.com/blog

URL to article: http://www.debthelp.com/blog/2008/10/20/rising-credit-card-delinquencies-may-aid-your-debt-settlement-efforts/

URLs in this post:
[1] CNNMoney.com: http://money.cnn.com/news/newsfeeds/articles/djf500/200810171647DOWJONESDJONLINE000743_FORTUNE5.htm
[2] Manchester Publishing Company: http://www.zipdebt.com
[3] Credit Advisory Alliance: http://www.caacredit.com