Debt Forgiveness a No-Go with Regulators

An unlikely alliance of financial industry and consumer advocate groups went to Federal bank regulators asking for relief. Providing a bellwether of the type of debt settlement needs ahead for customers, these groups went asking for government assistance in a plan to forgive mountains of credit card debt that is snowballing in defaults.

The Office of the Comptroller of the Currency rejected this industry plan, which would have forgiven as much as 40 percent of outstanding consumer credit card debt. This proposal itself reflects the crisis bubbling up in the credit card market.

Credit Card Industry Proposed 40% Forgiveness

The proposal from the credit card industry would have allowed these financial institutions to defer losses on consumer credit accounts for several years on consumer debt they forgive. However, the bank regulators felt that “kicking the can down the street” was not a prudent way to manage the crisis.

Consumers, even those with good credit, are being pinched by the rapidly deteriorating economy. Meanwhile, banks are taking tens of billions of dollars in losses on these defaults.

The window of opportunity is wide open for the debt settlement industry

The environment is ideal for debt settlement providers to be the emissaries for both parties.

Knowing millions of consumer credit customers are in a pickle and banks are ready to negotiate should be a great opportunity. You can help both consumers and banks to make it through the upcoming hard times.

Credit card charge-offs on balances that are written off as unpaid have climbed to 6.8 percent, climbing 48 percent from last year.

Credit Card Debt Next Crisis

Credit card debt is the backroom “card game” that financial markets don’t want to talk about yet. However, the problem is already at historical levels. It is only a matter of time before thousands of consumers get squeezed by lost jobs, higher costs, declining home values, and begin to feel the full weight of their revolving consumer credit.

Americans have now accumulated over $970 billion, nearly $1 trillion in credit card debt. This is a massive number considering total outstanding mortgage debt is $11 trillion.

So what is the alarm over? Mortgages are financed at 6-8 percent and are secured with an asset, but still came crashing down on consumers and financial markets. Imagine what is in store for this $1 trillion dollars of debt financed at 13-25% and is unsecured. The crisis is only a matter of time.

Start Working Debt Leads Now

For that reason it is important to start thinking about your customers now. Create a marketing plan that reaches out to these target customers early. The earlier you talk to them the more likely you are to have a compelling solution.

More than likely your potential clients are already inquiring about alternatives to help ease their debt burden.

There are 3 easy and affordable ways to reach these clients early:

• Dig into your past client database and do a check-up
• Revisit past prospects that passed on your debt settlement solution
• Buy aged debt leads to get immediate, motivated debt customers

2009 is shaping up to be a banner year for debt settlement. Jump start your opportunities early by moving your debt leads marketing program into action in the last weeks of 2008.

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(photo credit: The TruthAbout…)