How Americans get out of credit card debt.

When we decided to build a company to help people with debt, we didn’t quite understand the entire spectrum of available options or magnitude of the problem at hand. Even though we had struggled with the problem ourselves, had first-hand experience helping friends and family, and had heard about things like Debt Management Programs (DMPs), credit counseling and debt consolidation; navigating these options was confusing and time-consuming.

Needless to say, today we have a much clearer picture of what’s available and how everything works within the ecosystem. As part of our public launch, we put together a visual overview of each option alongside noteworthy pros/cons and also added how we see ourselves fitting into the overall debt relief ecosystem to help answer the question “why another solution?”.

How Americans Get Out of Credit Card Debt

How Americans Get Out of Debt

(click to enlarge)

What’s Broken
If you are struggling with credit card debt or are simply ready to get it under control, your viable options are limited to credit counseling/debt management, debt consolidation, debt settlement, and bankruptcy and/or simply a spreadsheet. Each have risks and affect your credit reputation in different ways. Each option (except the spreadsheet) is also *out of your control*, that is to say, you are essentially handing over control to someone else. This isn’t a good long-term strategy because your credit reputation is such an integral part of your financial well-being especially if you are tackling a challenging financial situation like debt.

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Existing options and the current ecosystem are confusing because everyone’s situation is different and the subtleties and consequences of each are not clear. If you have all the information and data in a single place, this becomes less of an issue. The opaque fee structures and predatory business models only add to the confusion.

What’s Needed
Especially given our current economic climate, we see a serious need for financial products that give people control over their debt-related options and credit reputations. There is a need for a single place where all your debt-related information and data lives – where you can be in control of your overall financial health. Something that is useful whether you are struggling with debt or not. We wanted something like this, so we started building it.

Our Vision
We believe there is a need for simple financial tools that can resolve your debt-related challenges and help you manage your credit reputation.

Our approach to this has the following differences with respect to existing options:

1. All your credit card debt-related data in single place -

  • We use credit report information (without affecting you negatively) in addition to linking and tracking your credit card accounts in a single place.
  • We leverage data partnerships to provide this type of 360* degree view in order to provide personalized guidance. (this is your data and you should know, understand and use it)
  • We look for specific types of activity including but not limited to new transactions, fees, and changes in your payments and due dates to help you stay on top of your situation. The same applies if something changes with respect to your credit reputation.
  • Our account data aggregation partner, Yodlee!, is highly regarded for maintaining world-class security. We stay true to this standard as well.
    * we only support credit cards, but will be expanding this to include other forms of debt soon.

2. Highlight legitimate options for you; not all options -

  • We will try to keep you abreast of your options as you track and manage your debt. If something comes up that will save you time and money, we highlight it for you in context of your debt situation.
  • We establish partnerships where it makes sense with transparent financial companies, but never sell your data. Ultimately, you are in control of what options make sense for your situation. Our partnership with Lending Club for example is highlighted only when it makes sense for your situation.
  • No credit card or other offers.

3. Shift control, automate and motivate -
Technology is all about automating and shifting control. Since our public launch a few days ago for example, we are helping people track over $35M in credit card debt. This means thousands of people are now taking control of their situation. We anticipate this will continue to grow and as it does we will continue to release more and more powerful ways for people to control their credit reputations and manage their debt. In addition, unlike traditional banking and financial services applications we hope to motivate you to take action with a beautiful and usable interface.

4. Someone to vouch for your progress -
Part of our vision is to provide people with detailed information about their situation and vouch for their progress. Credit and FICO scores were designed for lenders. In fact, they typically only predict the likelihood a borrower will default in the next 90 days and not much more. Unfortunately, this model means you have little visibility or control over the information that goes into your overall creditworthiness.

5. Provide a financial service with no gimmicks or hidden fees.

Let us know if you have any questions or ideas. Thanks for the support.

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  • http://onomojo.myopenid.com/ BMac

    What about the ‘cash only’ option? As far as I’m concerned, me and the banks are even after that whole trillion dollar end of the world scam they pulled on us as Bush left office. I’ve been cash only since and doing just fine. Credit is a relative term. What’s not paying my debt cost me? It costs me my credit. Whippy.

    • http://GetOutOfDebt.org Steve Rhode

      Another point of view is that it is not the avoidance of the use of a credit card that is the goal, but the avoidance of problem debt. Like it or not, having a good credit score, when you can, has some distinct benefits. nnFocusing on eliminating the debt or brining it back inside your income is a positive goal and one that can be achieved with the ReadyForZero approach if you have some drive and determination.

  • http://onomojo.myopenid.com/ Onomojo

    What about the ‘cash only’ option? As far as I’m concerned, me and the banks are even after that whole trillion dollar end of the world scam they pulled on us as Bush left office. I’ve been cash only since and doing just fine. Credit is a relative term. What’s not paying my debt cost me? It costs me my credit. Whippy.

    • http://GetOutOfDebt.org Steve Rhode

      Another point of view is that it is not the avoidance of the use of a credit card that is the goal, but the avoidance of problem debt. Like it or not, having a good credit score, when you can, has some distinct benefits.

      Focusing on eliminating the debt or brining it back inside your income is a positive goal and one that can be achieved with the ReadyForZero approach if you have some drive and determination.

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    Americans can always find ways how to get out of their debts. Thank your for pointing this out.

  • http://www.occent.com ann @ merchant services

    Americans can always find ways how to get out of their debts. Thank your for pointing this out.

  • calie

    Another point of view is that it is not the avoidance of the use of a credit card that is the goal, but the avoidance of problem debt. Like it or not, having a good credit score, when you can, has some distinct benefits.
    Merchant services

  • calie

    Another point of view is that it is not the avoidance of the use of a credit card that is the goal, but the avoidance of problem debt. Like it or not, having a good credit score, when you can, has some distinct benefits.
    Merchant services

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    Smart way to handle Debt issue. Thanks for taking time to share it