I am seeing a lot of advertising about debt settlement for people with credit card debt over $10,000. They make it appear that the 2008 Federal Stimulus Package has provisions that allow people to negotiate a credit card debt over $10,000 to a lower amount. It all seems fishy to me. I checked with a couple of companies about how they do it. They take money from you for four months that pays your fee while you cancel your credit card and do not make payments during the four month period. During this period they negotiate a lower amount to pay the company. Does this sound familiar to anyone?

Is there really anything in the stimulus package that helps people to lower their credit card debt? Are these debt settlement companies effective or just glorified scams? I am familiar with consumer credit counseling. I have only been aware of debt settlement that is being advertised for about a year. What is the scoop on these debt settlement companies?

Bigray in Ok

No.
There is some debt settlement companies BEFORE the stimulus.
On a credit report it will show "settle for less then the balance".
IT will NOT be helpful.
It WILL lower your credit score.
Please use Consumer Credit Counseling Service (http://www.cccsatl.org/).
Doing so you will avoid scams.

I have long been suspicious of such folks.

Confessions Of A Debt Settlement Company Worker - The Consumerist (http://consumerist.com/2008/03/confessions-of-a-debt-settlement-company-worker.html)

Please god we don't end up with a government bailout on $10,000 of credit card debt. We are all struggling enough without having to bail people out who overspent and put it on their credit card.

Please god we don't end up with a government bailout on $10,000 of credit card debt. We are all struggling enough without having to bail people out who overspent and put it on their credit card.

I really dont think you read the first posting or the following ones.

The Consumer Credit Counseling Center can let you speak with someone who can help you work out a payment plan to help you pay your card(s) off in the most efficient manner. Otherwise, you might also seek out a Certified Financial Planner that can look at your overall situation and see what you may be able to do to 1) lower your monthly expenses and 2) help you work out a payment plan but with a more all-encompassing view of your situation to see if there are some alternatives. The financial planner will charge you a fee, but it may save you far more money than it will cost you. Whatever you do, don't use the advertised services, bankruptcy services and the like at this point.

Another suggestion is to contact the card company(s) and try to negotiate a better rate of interest. Quite often, they will drop your rate if faced with the choice of lowering your rate or losing the balance by bankruptcy. Sometimes the rate can be lowered 10-15% points.

Finally, cut up your credit card(s) so you don't add anything more to them!

I really dont think you read the first posting or the following ones.

When I wrote:

Please god we don't end up with a government bailout on $10,000 of credit card debt. We are all struggling enough without having to bail people out who overspent and put it on their credit card.
It was just a generic response to this:

Is there really anything in the stimulus package that helps people to lower their credit card debt?

I read the postings.

And in the postings it was said the "debt settlement scams" was before the stimulus..