By Wikum Holiyabandara
When we talk about debt relief, so many methods and strategies can be found in the market. For those who are looking at ways to eliminate their debts, a little insight to their debt portfolio and the collateral backing them could prove to be very useful. This article tries to point out the ways in which you could use this understanding to get rid of your own debts.
Well, understanding your debt portfolio and the specific charges they create over your assets is an inside-out strategy. Rather than looking at market based strategies, let us formulate our own strategy to eliminate debt. This is how it works.
First, we need to analyze our debt portfolio. Find your loan agreements and classify your loans under separate categories. For instance, we can segregate them according to the nature of the advance i.e. whether they are short term debts, credit card debts, long term debts and mortgage loans. After the classification, we need to classify these debts again under unsecured debts and secured debts. A further classification is needed and that would be under the headings of exempt debts and non exempt debts according to the Bankruptcy Code. The whole purpose of this exercise is to understand the risk these debts pose to the borrower. For instance, it is advisable not to default on a loan which is secured, and has a charge over your non exempt assets. These loans need to be settled according to the repayment plan whenever possible. If the debt is unsecured and is an exempt debt, we do not need to worry too much about it. In any event, defaulting on a loan is never recommended and this article only points out a strategy which could lessen the impact on your financial position!
Once we have picked the unsecured debts from our portfolio, we can apply some pressure on the creditors by sending a warning signal to them-skip paying a couple of installments! This will put them in high alert and they will start finding ways to make you settle the debt. As an unsecured debt is generally difficult to recover, the only realistic way for them to recover it is through your payments. This will create your bargaining power which you need to use wisely.
Therefore, this method will help you to obtain a good discount on the debt, negotiate on a better interest rate and gain other concessions which you would not be able to obtain otherwise.
Debt settlement is a legitimate alternative to bankruptcy and should only be considered by consumers who have at least $10k in unsecured debt and are experiencing a financial hardship. To compare debt settlement companies it would be wise to visit a free debt relief network that will provide a free debt consultation to determine which option is best for you. [http://www.freedebtreductionhelp.com]Free Debt Consultation
Article Source: [http://EzineArticles.com/
Friday, June 18, 2010
Thursday, June 17, 2010
Credit Card Debt Out of Control? - The Best Debt Relief Options For Out of Control Credit Cards
By VS Iyer
Why is out of control credit card a very bad thing? Morality and ethics apart, having excessive credit card debt is not good for your financial planning. This is because the interest rate on your credit card will continue to rise and will reach the sky if you exceed the account limit.
Another factor that you have to consider is the impact of the excessive credit card debt on your credit rating. You will enjoy a very poor rating and you will find it next to impossible to overcome the problem of financial complications until you reduce your credit card debt.
There is a time to try and repair the brake and stop the vehicle. However, when you know that your vehicle has gone out of control and no amount of effort is going to bring it back under control, you should plan to jump out of the vehicle as quickly as possible.
If your runaway credit card debt has gone beyond control, you should start planning alternate measures that will help you bring it under control without causing permanent damage to your process.
Just as crashing your vehicle into a wall is not a solution, opting for bankruptcy is not a solution. Rather, you should make use of other alternatives that will help you bring your vehicle under control.
Why don't you check out debt settlement? If you are very close to bankruptcy, you have absolutely nothing to lose by going in for this debt relief option. At best, you will enjoy relief from all your finances. At worst, you will end up in bankruptcy, something which was always on the cards.
This is the best debt relief option because it takes care of your financial problems without any problems whatsoever. All you have to do is negotiate with your lenders and arrive at a 50%-70% discount on the total amount owed. Once this is done, you just have to stick to the plan determined by your lender.
If you make use of the services of professional, you can use their advice and guidance as well. Sooner or later, you will bring your debts under control. Normally, it takes around 15-18 months to complete this process and bring your debts down to zero.
Once that is done, it is just a question of retaining control over your finances and keeping your credit card debt under control so that your financial problems come to an end permanently.
If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called "Free Debt Relief Networks" that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below: [http://www.freedebtreductionhelp.com]Free Debt Help.
Article Source: [http://EzineArticles.com
Why is out of control credit card a very bad thing? Morality and ethics apart, having excessive credit card debt is not good for your financial planning. This is because the interest rate on your credit card will continue to rise and will reach the sky if you exceed the account limit.
Another factor that you have to consider is the impact of the excessive credit card debt on your credit rating. You will enjoy a very poor rating and you will find it next to impossible to overcome the problem of financial complications until you reduce your credit card debt.
There is a time to try and repair the brake and stop the vehicle. However, when you know that your vehicle has gone out of control and no amount of effort is going to bring it back under control, you should plan to jump out of the vehicle as quickly as possible.
If your runaway credit card debt has gone beyond control, you should start planning alternate measures that will help you bring it under control without causing permanent damage to your process.
Just as crashing your vehicle into a wall is not a solution, opting for bankruptcy is not a solution. Rather, you should make use of other alternatives that will help you bring your vehicle under control.
Why don't you check out debt settlement? If you are very close to bankruptcy, you have absolutely nothing to lose by going in for this debt relief option. At best, you will enjoy relief from all your finances. At worst, you will end up in bankruptcy, something which was always on the cards.
This is the best debt relief option because it takes care of your financial problems without any problems whatsoever. All you have to do is negotiate with your lenders and arrive at a 50%-70% discount on the total amount owed. Once this is done, you just have to stick to the plan determined by your lender.
If you make use of the services of professional, you can use their advice and guidance as well. Sooner or later, you will bring your debts under control. Normally, it takes around 15-18 months to complete this process and bring your debts down to zero.
Once that is done, it is just a question of retaining control over your finances and keeping your credit card debt under control so that your financial problems come to an end permanently.
If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called "Free Debt Relief Networks" that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below: [http://www.freedebtreductionhelp.com]Free Debt Help.
Article Source: [http://EzineArticles.com
Credit Debt Settlements - How to Capitalize on Government Tax Breaks For Debt Relief
By VS Iyer
You may be forgiven for feeling cynical and thinking that a few hundred dollars or even a few thousand dollars of tax break is not going to make any difference to your finances. When you have credit card debts running in excess of $50,000 and when you have a personal loan worth another $25,000 and this is just the unsecured debts we are talking about, there is no doubt that you are very close to bankruptcy.
How can tax breaks help you? Well, if your boss was to come in and tell you that 50% of your salary would be deducted just because he or she has made a mess of the finances, would you agree? Well, if the only other option is to be fired, you certainly might agree.
However, would not the presence of a few thousand dollars on the table sweeten the deal? That is exactly what you should do with your tax breaks as well. Rather than simply dumping the money into your credit card account, you should keep it in your hand.
Once you have this amount in your hand, you should start negotiations with your lender and arrive at a 50%-70% discount on the total amount owed. Even if you reduce your $100,000 credit card debt and unsecured debt by 60%, you will have to pay another $40,000 to completely repay the debt and bring it down to zero.
If you have $4000 in your hand and if you are prepared to offer it as an initial payment, chances are high that the lender would definitely agree to the entire deal. This is because you will be paying 10% of the settled amount upfront and you will seek an installment facility for only the balance 90% amount.
This certainly is better than walking into the lenders office and asking for breaks and discounts and reduction of debt without offering anything in return.
If you make use of the services of a professional service provider, you can enjoy fantastic credit debt settlements by offering this money as the upfront fees. Make sure you do not pay more than 50% of the total amount payable in the initial duration of the settlement deal.
As time passes, you can pay more and reduce your debts down to manageable levels. If you improve your credit score, you can even go in for a consolidation loan to further reduce the debt payable.
If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called "Free Debt Relief Networks" that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below: [http://www.freedebtreductionhelp.com]Free Debt Help.
Article Source: [http://EzineArticles.com
You may be forgiven for feeling cynical and thinking that a few hundred dollars or even a few thousand dollars of tax break is not going to make any difference to your finances. When you have credit card debts running in excess of $50,000 and when you have a personal loan worth another $25,000 and this is just the unsecured debts we are talking about, there is no doubt that you are very close to bankruptcy.
How can tax breaks help you? Well, if your boss was to come in and tell you that 50% of your salary would be deducted just because he or she has made a mess of the finances, would you agree? Well, if the only other option is to be fired, you certainly might agree.
However, would not the presence of a few thousand dollars on the table sweeten the deal? That is exactly what you should do with your tax breaks as well. Rather than simply dumping the money into your credit card account, you should keep it in your hand.
Once you have this amount in your hand, you should start negotiations with your lender and arrive at a 50%-70% discount on the total amount owed. Even if you reduce your $100,000 credit card debt and unsecured debt by 60%, you will have to pay another $40,000 to completely repay the debt and bring it down to zero.
If you have $4000 in your hand and if you are prepared to offer it as an initial payment, chances are high that the lender would definitely agree to the entire deal. This is because you will be paying 10% of the settled amount upfront and you will seek an installment facility for only the balance 90% amount.
This certainly is better than walking into the lenders office and asking for breaks and discounts and reduction of debt without offering anything in return.
If you make use of the services of a professional service provider, you can enjoy fantastic credit debt settlements by offering this money as the upfront fees. Make sure you do not pay more than 50% of the total amount payable in the initial duration of the settlement deal.
As time passes, you can pay more and reduce your debts down to manageable levels. If you improve your credit score, you can even go in for a consolidation loan to further reduce the debt payable.
If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called "Free Debt Relief Networks" that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below: [http://www.freedebtreductionhelp.com]Free Debt Help.
Article Source: [http://EzineArticles.com
Tuesday, June 15, 2010
Credit Card Debt Settlements - When Does Debt Settlement Make Financial Sense?
By Aditya Nath
If you have debts that have amassed over a period of time, this is the right time to pay out the dues and restore a sense of financial freedom. The reason why the words 'right time' makes sense is because of the debtor-favoring options available post economic revival. Another aspect that you need to dwell upon is the amount or percentage of bad debts that are due. If you have a few thousand dollars in bad debts, you may not benefit much because debt settlements work best when you have you have a substantial amount of debts.
Let is dig a little deeper into this. Debt settlement as you know is a process where you agree to pay a portion of your bad debts and this payment is considered as a payment made in full by the creditor. Depending on the nature and amount of bad debts your negotiation strategy has to be designed to target hefty discounts are on offer. Debt settlement makes financial sense in two cases; firstly, if you have debts greater than 10 thousand dollars, because this makes you a good candidate to be considered for a debt settlement deal. The creditor will be willing to offer a discounted pay out option on your debts because he is sure to recover at least a portion it. Secondly, if you have all the bad debts as unsecured debts, it makes a strong case because you will be putting yourself in a dangerous position if you let the bad debts accrue. An un pledged asset can be under the creditor's radar and you will be obligated to part with it if you are not taking repayment seriously.
While all this seems to be an easy process, in reality a lot of written and oral communication has to take place in order to initiate, process and resolve the issue in hand. Achieving a fair discount after a debt negotiation is possible only if you are prepared with a strong case to prove that you are eligible for a discount. Debt settlement companies specialize in different areas of debt and credit repair making it easy for you to quash the huge debts that have accrued over several months or years.
Make sure to have a cautious approach when choosing one among the several debt settlement companies. It is your choice of the right firm to work with, that makes a debt negotiation successful. Make sure you take the right steps by validating the credentials of the company before entering into a contract.
To get in touch with a good settlement company to settle card debts in the least possible time click the link http://www.uscaonline.com and allow our specialist to sort your debt issue effectively.
Article Source: [http://EzineArticles.com/
If you have debts that have amassed over a period of time, this is the right time to pay out the dues and restore a sense of financial freedom. The reason why the words 'right time' makes sense is because of the debtor-favoring options available post economic revival. Another aspect that you need to dwell upon is the amount or percentage of bad debts that are due. If you have a few thousand dollars in bad debts, you may not benefit much because debt settlements work best when you have you have a substantial amount of debts.
Let is dig a little deeper into this. Debt settlement as you know is a process where you agree to pay a portion of your bad debts and this payment is considered as a payment made in full by the creditor. Depending on the nature and amount of bad debts your negotiation strategy has to be designed to target hefty discounts are on offer. Debt settlement makes financial sense in two cases; firstly, if you have debts greater than 10 thousand dollars, because this makes you a good candidate to be considered for a debt settlement deal. The creditor will be willing to offer a discounted pay out option on your debts because he is sure to recover at least a portion it. Secondly, if you have all the bad debts as unsecured debts, it makes a strong case because you will be putting yourself in a dangerous position if you let the bad debts accrue. An un pledged asset can be under the creditor's radar and you will be obligated to part with it if you are not taking repayment seriously.
While all this seems to be an easy process, in reality a lot of written and oral communication has to take place in order to initiate, process and resolve the issue in hand. Achieving a fair discount after a debt negotiation is possible only if you are prepared with a strong case to prove that you are eligible for a discount. Debt settlement companies specialize in different areas of debt and credit repair making it easy for you to quash the huge debts that have accrued over several months or years.
Make sure to have a cautious approach when choosing one among the several debt settlement companies. It is your choice of the right firm to work with, that makes a debt negotiation successful. Make sure you take the right steps by validating the credentials of the company before entering into a contract.
To get in touch with a good settlement company to settle card debts in the least possible time click the link http://www.uscaonline.com and allow our specialist to sort your debt issue effectively.
Article Source: [http://EzineArticles.com/
Monday, June 14, 2010
3 Credit Card Debt Settlement Facts That Can Help You to Eliminate Your Debt Effectively
By Jeslyn Jessy
Credit card debt is considered a serious problem among most of the Americans nowadays. Many people are striving very hard to get rid of their debts. In order to reduce their financial burden, they choose to negotiate with the creditors to forgive partial of their debts. If you also intend to eliminate your debt, the very first thing you must do is to learn some important facts about debt settlement.
· What is debt settlement?
It is actually a practice which allows the debtors to pay back partial of their debts, usually less than 50% of their total debt, depending on the financial position of the debtors. The creditors usually report the debt as "settled" or "paid in full" with zero balance. However, it is not compulsory for the creditors to accept all the settlement proposals. They have the right to reject the settlement offers.
· What can be negotiated?
In order to reduce your total credit card debt, you can negotiate with your creditors in 2 ways, i.e. reduce the total debt amount or reduce the interest rate. If you have accumulated a big sum of debt, you are advised to request from your creditors to reduce partial of your total debt. This will help to eliminate your debt faster. If your debt amount is not big, you may request your creditors to reduce your annual percentage rate. Besides, you may also ask your creditors to waive the annual fee and late fee charges. You are reminded not to negotiate with your creditors to reduce your monthly payment because it will only delay your progress of becoming debt free and it doesn't help you to save any cost.
· Is there any negative effect caused by debt negotiation?
No doubt this financial option can get you out of debt within 2 years but it can result in a negative mark on your credit score. Basically, you can't contact your creditor to discuss for settlement if your past due is less than 3 months. For your information, the longer you drag your payment, the worse your credit rating is. In order to "rescue" the situation, you need to bargain with your creditor to remove all these negative statements from your credit file.
Besides knowing the above mentioned facts, you also need to learn about the Fair Debt Collection Practices Act. By equipping yourself with all the useful information, you will be able to negotiate with your creditors more confidently.
For more [http://creditcarddebtsolver.com/better-ways-of-eliminating-my-credit-card-debt/]credit card debt elimination resources tips, visit [http://CreditCardDebtSolver.com]http://CreditCardDebtSolver.com.
Article Source: [http://EzineArticles.com/
Credit card debt is considered a serious problem among most of the Americans nowadays. Many people are striving very hard to get rid of their debts. In order to reduce their financial burden, they choose to negotiate with the creditors to forgive partial of their debts. If you also intend to eliminate your debt, the very first thing you must do is to learn some important facts about debt settlement.
· What is debt settlement?
It is actually a practice which allows the debtors to pay back partial of their debts, usually less than 50% of their total debt, depending on the financial position of the debtors. The creditors usually report the debt as "settled" or "paid in full" with zero balance. However, it is not compulsory for the creditors to accept all the settlement proposals. They have the right to reject the settlement offers.
· What can be negotiated?
In order to reduce your total credit card debt, you can negotiate with your creditors in 2 ways, i.e. reduce the total debt amount or reduce the interest rate. If you have accumulated a big sum of debt, you are advised to request from your creditors to reduce partial of your total debt. This will help to eliminate your debt faster. If your debt amount is not big, you may request your creditors to reduce your annual percentage rate. Besides, you may also ask your creditors to waive the annual fee and late fee charges. You are reminded not to negotiate with your creditors to reduce your monthly payment because it will only delay your progress of becoming debt free and it doesn't help you to save any cost.
· Is there any negative effect caused by debt negotiation?
No doubt this financial option can get you out of debt within 2 years but it can result in a negative mark on your credit score. Basically, you can't contact your creditor to discuss for settlement if your past due is less than 3 months. For your information, the longer you drag your payment, the worse your credit rating is. In order to "rescue" the situation, you need to bargain with your creditor to remove all these negative statements from your credit file.
Besides knowing the above mentioned facts, you also need to learn about the Fair Debt Collection Practices Act. By equipping yourself with all the useful information, you will be able to negotiate with your creditors more confidently.
For more [http://creditcarddebtsolver.com/better-ways-of-eliminating-my-credit-card-debt/]credit card debt elimination resources tips, visit [http://CreditCardDebtSolver.com]http://CreditCardDebtSolver.com.
Article Source: [http://EzineArticles.com/
Thursday, June 10, 2010
Learning About Debt Consolidation
By Peter Frost
Feeling Trapped? How about Learning a Little about Debt Consolidation
If you have been down this lonely and frustrating road before then you know what we are currently attempting to explain. The path to debt has been a long and winding road and was one that was full of potholes and exits that availed themselves to you as an out but you were either too busy or too far into debt to turn right or left. You can only keep driving and keep heading down the exact road that got you to where you are currently, in debt.
Better Benefits of Debt Consolidation
What are some of the better benefits in which you can get out of debt and keep your shirt at the same time? Take a look at this list if you would and learn a little something about how to escape the debt monster through debt consolidation.
Benefits of Debt Consolidation
Handing your debt load straight over to a debt consolidator is a very fast way to alleviate loads of stress and sleepless nights.
Forget about writing checks or given your debit card number to the collection agents online. That will be things of the past as the debt loan will handle all of that mess for you.
Drastically lower interest rates on all of your debts. Through consolidation, you can have your interest rates slashed by between 65% to 100% (varies by each individual creditor). You could save hundreds, possibly even thousands, of dollars in the basic and fundamental interest charges.
Faster debt pay off and a whole lot faster method of getting the family budget back on track. Because debt consolidation lowers your interest rate and thusly creates more money for you to use in better ways you will see a spike in your ability to buy the food and pay the bills. Most people pay off their debts between 2 and 5 years and you could be free even sooner with a harder lined budget.
Improved credit score and a score that will shine like the sun! You will enjoy the feeling that comes from only having a higher credit score. It will happen and it will change your life and the way you sleep at night and the way your family sees you. All good.
The end result from people that choose to go with a debt consolidation loan is that they feel better about the present and the future.
More Debt Consolidation Info...
Peter Frost is the content coordinator for leading finance related websites that offer [http://debtquotes.com/]debt consolidation advice and guidance. Find out what to look for in a [http://debtquotes.com/mission.html]debt consolidation service today to help you improve your finances and the quality of your life. Debt counseling will not wipe out your debts instantly but it will assist you in re-establishing your financial reputation. Do not trust companies that advertise Credit Repair instead of Counseling and promises instant deletion of your debts.
Article Source: [http://EzineArticles.com/
Feeling Trapped? How about Learning a Little about Debt Consolidation
If you have been down this lonely and frustrating road before then you know what we are currently attempting to explain. The path to debt has been a long and winding road and was one that was full of potholes and exits that availed themselves to you as an out but you were either too busy or too far into debt to turn right or left. You can only keep driving and keep heading down the exact road that got you to where you are currently, in debt.
Better Benefits of Debt Consolidation
What are some of the better benefits in which you can get out of debt and keep your shirt at the same time? Take a look at this list if you would and learn a little something about how to escape the debt monster through debt consolidation.
Benefits of Debt Consolidation
Handing your debt load straight over to a debt consolidator is a very fast way to alleviate loads of stress and sleepless nights.
Forget about writing checks or given your debit card number to the collection agents online. That will be things of the past as the debt loan will handle all of that mess for you.
Drastically lower interest rates on all of your debts. Through consolidation, you can have your interest rates slashed by between 65% to 100% (varies by each individual creditor). You could save hundreds, possibly even thousands, of dollars in the basic and fundamental interest charges.
Faster debt pay off and a whole lot faster method of getting the family budget back on track. Because debt consolidation lowers your interest rate and thusly creates more money for you to use in better ways you will see a spike in your ability to buy the food and pay the bills. Most people pay off their debts between 2 and 5 years and you could be free even sooner with a harder lined budget.
Improved credit score and a score that will shine like the sun! You will enjoy the feeling that comes from only having a higher credit score. It will happen and it will change your life and the way you sleep at night and the way your family sees you. All good.
The end result from people that choose to go with a debt consolidation loan is that they feel better about the present and the future.
More Debt Consolidation Info...
Peter Frost is the content coordinator for leading finance related websites that offer [http://debtquotes.com/]debt consolidation advice and guidance. Find out what to look for in a [http://debtquotes.com/mission.html]debt consolidation service today to help you improve your finances and the quality of your life. Debt counseling will not wipe out your debts instantly but it will assist you in re-establishing your financial reputation. Do not trust companies that advertise Credit Repair instead of Counseling and promises instant deletion of your debts.
Article Source: [http://EzineArticles.com/
Wednesday, June 9, 2010
Debt Settlement Or Debt Consolidation? - What Makes More Financial Sense?
By Owais Siddiqui
There are many different debt elimination methods, each of these methods have their own advantages and disadvantages. One should carefully study all the advantages and disadvantages of each of the elimination method and then make their final decision. Currently the two most famous and popular debt elimination methods are Liability settlement or debt consolidation. Which option will you go for, Debt settlement or Debt consolidation? The decision of your selection depends on your financial situation. Which option are you going for Debt settlement or debt Consolidation? I will tell you about the advantages and disadvantages of both these option and then you can easily determine which option is more suitable.
Debt settlements are negations between the debtors and the creditors. In these negotiations the debtor bargains for a discounted amount of loan that needs to be paid back. This discounted amount can be as low as 30% of the original amount. The discount is dependant on negotiation skills of the debtor or the agent the debtor has hired. The debtor can even ask for lower amount of interest rate and longer repayment time period. This way the debtor can easily pay back his loans and creditors get some part of their money back. The disadvantage of this option is that credit report of a debtor gets negatively affected.
Debt Consolidation is a debt elimination program. In this program, all the amount or different loans taken by the debtor are considered as one and then the interest rate of the entire loan amount is negotiated. The new interest rate is 75% of the original interest rate. The advantages of this method are that now the debtor does not have to make multiple payments and he is liable to make only one payment monthly. But the disadvantage is that the new interest rate does not makes a huge different as it is the interest rate being reduced and not the loan amount so the pressure of paying back the loan amount remains on the debtors head.
The decision, whether to go for debt settlement or debt consolidation depends on the choices you make. If you have the money or are in a financial situation that you can still make monthly payment then you should go for liability consolidation. If you think that you can settle for a small amount and have no more money to pay back to the creditors then you should go for liability settlement. You should also keep in mind that your credit report will state that you have taken the option of liability settlement. This will make the creditors hesitate before giving away any kind of loan to you.
Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free. [http://www.freedebtreductionhelp.com]Free Debt Advice.
Article Source: [http://EzineArticles.com
There are many different debt elimination methods, each of these methods have their own advantages and disadvantages. One should carefully study all the advantages and disadvantages of each of the elimination method and then make their final decision. Currently the two most famous and popular debt elimination methods are Liability settlement or debt consolidation. Which option will you go for, Debt settlement or Debt consolidation? The decision of your selection depends on your financial situation. Which option are you going for Debt settlement or debt Consolidation? I will tell you about the advantages and disadvantages of both these option and then you can easily determine which option is more suitable.
Debt settlements are negations between the debtors and the creditors. In these negotiations the debtor bargains for a discounted amount of loan that needs to be paid back. This discounted amount can be as low as 30% of the original amount. The discount is dependant on negotiation skills of the debtor or the agent the debtor has hired. The debtor can even ask for lower amount of interest rate and longer repayment time period. This way the debtor can easily pay back his loans and creditors get some part of their money back. The disadvantage of this option is that credit report of a debtor gets negatively affected.
Debt Consolidation is a debt elimination program. In this program, all the amount or different loans taken by the debtor are considered as one and then the interest rate of the entire loan amount is negotiated. The new interest rate is 75% of the original interest rate. The advantages of this method are that now the debtor does not have to make multiple payments and he is liable to make only one payment monthly. But the disadvantage is that the new interest rate does not makes a huge different as it is the interest rate being reduced and not the loan amount so the pressure of paying back the loan amount remains on the debtors head.
The decision, whether to go for debt settlement or debt consolidation depends on the choices you make. If you have the money or are in a financial situation that you can still make monthly payment then you should go for liability consolidation. If you think that you can settle for a small amount and have no more money to pay back to the creditors then you should go for liability settlement. You should also keep in mind that your credit report will state that you have taken the option of liability settlement. This will make the creditors hesitate before giving away any kind of loan to you.
Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free. [http://www.freedebtreductionhelp.com]Free Debt Advice.
Article Source: [http://EzineArticles.com
Tuesday, June 8, 2010
Are Your Debts Keeping You Awake at Night? Erase Your Debts Legally and Stop the Stress
By Jane Richards
Do you want to free yourself from unsecured debts? Is there a way to erase your debts legally? We are here to help you get rid of your debts. There are ways to free yourself from outstanding amounts of debt, one of which is debt settlement. Debt settlement is considered the most legitimate process in eradicating your debts effectively.
As we all know most countries are experiencing a financial crisis, including America. Because of this it is considered to be a bright idea to choose debt settlement in paying your unsecured debts instead of filing for bankruptcy. Settlement is quicker, more effective and your credit score recovers quickly.
The important thing is you take action and do something quickly. A lot of people hope for help from friends and family and when it doesn't come they realise too late that the credit card companies and lenders have passed the debt onto collections and when this happens things get much worse.
You need to analyze your financial situation. You must look at your monthly income against your monthly expenses. If in case you cannot save enough money to repay your credit card debt, you can have the option to have a debt consolidation plan or debt settlement plan. If your outgoings or reaching the same level as your income you need help quickly to erase your debt legally.
it is advisable to hire a debt settlement company to help you out. The experienced agents and professionals will aid you in eliminating your debts by negotiating with credit card companies and lenders to reduce the amount to be paid. The knowledge and skill of these agents is critical to the success of settling your debts and that is why you must choose a good one.
Choosing the best settlement company for you is very important. That is why there are debt relief networks available for you to help you in choosing the best settlement company. Debt relief networks can be found though the internet and they will offer you necessary information about the settlement companies.
As soon as you get into debt you need to do something about it. Some people panic and start taking loans without looking at other ways to erase their debt legally. Loans have to be paid back with interest and if you cannot repay them you risk losing your home.
If you are in debt all you need to do is to get some help and take action to erase your debt for good before it gets worse.
Here is the best resource to [http://obamastimulusgrants.info]Erase Your Debts Legally just [http://obamastimulusgrants.info]click here to get out of debt now.
Article Source: [http://EzineArticles.com/
Do you want to free yourself from unsecured debts? Is there a way to erase your debts legally? We are here to help you get rid of your debts. There are ways to free yourself from outstanding amounts of debt, one of which is debt settlement. Debt settlement is considered the most legitimate process in eradicating your debts effectively.
As we all know most countries are experiencing a financial crisis, including America. Because of this it is considered to be a bright idea to choose debt settlement in paying your unsecured debts instead of filing for bankruptcy. Settlement is quicker, more effective and your credit score recovers quickly.
The important thing is you take action and do something quickly. A lot of people hope for help from friends and family and when it doesn't come they realise too late that the credit card companies and lenders have passed the debt onto collections and when this happens things get much worse.
You need to analyze your financial situation. You must look at your monthly income against your monthly expenses. If in case you cannot save enough money to repay your credit card debt, you can have the option to have a debt consolidation plan or debt settlement plan. If your outgoings or reaching the same level as your income you need help quickly to erase your debt legally.
it is advisable to hire a debt settlement company to help you out. The experienced agents and professionals will aid you in eliminating your debts by negotiating with credit card companies and lenders to reduce the amount to be paid. The knowledge and skill of these agents is critical to the success of settling your debts and that is why you must choose a good one.
Choosing the best settlement company for you is very important. That is why there are debt relief networks available for you to help you in choosing the best settlement company. Debt relief networks can be found though the internet and they will offer you necessary information about the settlement companies.
As soon as you get into debt you need to do something about it. Some people panic and start taking loans without looking at other ways to erase their debt legally. Loans have to be paid back with interest and if you cannot repay them you risk losing your home.
If you are in debt all you need to do is to get some help and take action to erase your debt for good before it gets worse.
Here is the best resource to [http://obamastimulusgrants.info]Erase Your Debts Legally just [http://obamastimulusgrants.info]click here to get out of debt now.
Article Source: [http://EzineArticles.com/
Thursday, June 3, 2010
Legitimate Debt Relief Options - What's the Best Way Out of Debt?
By Richard Haws
Legitimate debt relief options are available in the market which has outpaced the traditional method of bankruptcy filing. Bankruptcy has a number of negative impacts which cause future financial troubles for the consumer. There is no doubt that the consumers can eliminate the debt completely but the negative impacts are way more complicated and bring down unexpected troubles for the consumers. The bad aspects of bankruptcy are mentioned below:
• The first hurdle that a consumer needs to overcome is that he or she has to qualify for bankruptcy. The amended bankruptcy laws have made it difficult for the consumers to file for bankruptcy at their will.
• Once a consumer files for bankruptcy after crossing the first hurdle, they will eliminate the debt completely only to face future financial troubles in form of loss of credibility and reduced credit score.
• The report of bankruptcy filing shows up on the credit history for a period of 7-10 years and during this period the consumer is not allowed to borrow further credit from any creditor even if the person is in dire need of money.
This explains why bankruptcy filing is not the best option. The best thing that a consumer can do is to go for a debt settlement deal. Settlement does not only eliminate debt but also avoids the negative impacts of bankruptcy. For debt settlement to work, the consumer needs to have an overall debt of $10k or more and must have that debt consolidated in one single credit card which has the lowest rate of interest. Once these conditions are satisfied, the consumer needs to hire a professional settlement company. The negotiator from the company will advise the consumer not to pay the creditor in order to prove that the debtor is in serious financial trouble.
Once the consumer stops the payments, the creditor waits for a period of 12-16 weeks and then sells off the debt to a collection agency at a price of 20-30 cents on each dollar. The negotiator then contacts the creditor and offers a better rate of 40-50 cents on the dollar. The creditor finds it attractive on the grounds that the deal will mean 100% ROI for the collection agency and readily agrees and ultimately eliminates at least 50% of the debt. Thus debt settlement, which is one of the legitimate debt relief options, is the best way to get out of debt.
If you have over $10,000 in unsecured debt it may be a wise financial decision to consider a debt settlement. Due to the recession and overwhelming amount of people in debt, creditors are having no choice but to agree to debt settlement deals. To find legitimate debt reduction help in your state and get free debt advice then check out the following link. [http://www.freedebtsettlementadvice.com]Free Debt Advice
Article Source: [http://EzineArticles.com
Legitimate debt relief options are available in the market which has outpaced the traditional method of bankruptcy filing. Bankruptcy has a number of negative impacts which cause future financial troubles for the consumer. There is no doubt that the consumers can eliminate the debt completely but the negative impacts are way more complicated and bring down unexpected troubles for the consumers. The bad aspects of bankruptcy are mentioned below:
• The first hurdle that a consumer needs to overcome is that he or she has to qualify for bankruptcy. The amended bankruptcy laws have made it difficult for the consumers to file for bankruptcy at their will.
• Once a consumer files for bankruptcy after crossing the first hurdle, they will eliminate the debt completely only to face future financial troubles in form of loss of credibility and reduced credit score.
• The report of bankruptcy filing shows up on the credit history for a period of 7-10 years and during this period the consumer is not allowed to borrow further credit from any creditor even if the person is in dire need of money.
This explains why bankruptcy filing is not the best option. The best thing that a consumer can do is to go for a debt settlement deal. Settlement does not only eliminate debt but also avoids the negative impacts of bankruptcy. For debt settlement to work, the consumer needs to have an overall debt of $10k or more and must have that debt consolidated in one single credit card which has the lowest rate of interest. Once these conditions are satisfied, the consumer needs to hire a professional settlement company. The negotiator from the company will advise the consumer not to pay the creditor in order to prove that the debtor is in serious financial trouble.
Once the consumer stops the payments, the creditor waits for a period of 12-16 weeks and then sells off the debt to a collection agency at a price of 20-30 cents on each dollar. The negotiator then contacts the creditor and offers a better rate of 40-50 cents on the dollar. The creditor finds it attractive on the grounds that the deal will mean 100% ROI for the collection agency and readily agrees and ultimately eliminates at least 50% of the debt. Thus debt settlement, which is one of the legitimate debt relief options, is the best way to get out of debt.
If you have over $10,000 in unsecured debt it may be a wise financial decision to consider a debt settlement. Due to the recession and overwhelming amount of people in debt, creditors are having no choice but to agree to debt settlement deals. To find legitimate debt reduction help in your state and get free debt advice then check out the following link. [http://www.freedebtsettlementadvice.com]Free Debt Advice
Article Source: [http://EzineArticles.com
Tuesday, June 1, 2010
Life After Debt - Strategies for Dealing with Problem Debt
Life After Debt - Strategies for Dealing with Problem Debt
By Brian Sabalinski
Honorably and ethically rid yourself of burdensome debts using the little known Negotiation Strategy, without having to experience the loss of control and privacy associated with filing for bankruptcy, consolidation, or credit counseling.
The inability to reduce debt and saving money are the two biggest obstacles preventing Americans from living financially sound lives. National statistics show that money problems play a role in 80 percent of all divorces. One in 54 households will declare bankruptcy. Debt is at an all-time high, particularly credit card debt. The total amount of consumer debt in the United States is nearly $1.4 trillion.
If you are one of the millions of Americans burdened with debt and have trouble making those never-ending monthly payments, help is available. You don't need to go it alone. If you are a typical American family, you have $25,000-$30,000 worth of credit card debt (excluding mortgages, car loans, and student loan payments), and you're paying $500 to $900 every month in endless minimum payments.
Like you, many people continue making their minimum monthly payments believing that they are making progress. They are living in a state of denial saying "Someday, somehow, something will happen. Things will get better, and my debt problem will be gone." Then years go by and they only find themselves in a downward spiral getting nowhere. They have paid their creditors thousands of dollars but their debt load never gets lighter. For example, if you were to continue making minimum payments on a $9,000 debt, and not add any more debt, it will take you over 10 years to pay it off. You will end up spending many thousands more than the original amount and 80% of the money paid will have gone to interest and fees. Most people add more debt as they go, so the reality is this - Without an aggressive approach to terminating debt once and for all, you will NEVER get rid of debt.
Today, people have options. There are four strategies for dealing with problem debt you will see advertised: Debt Consolidation, Consumer Credit Counseling Services (CCC), Bankruptcy, and Debt Negotiation. Each strategy must be considered carefully!
Debt Consolidation - The Common Approach
Unfortunately debt consolidation is the most common solution people think of when they fall victim to financial problems. It is a sad fact that about 75% of people who consolidate their debt find themselves in much deeper financial trouble than they were in to begin with. All consolidation loans do is transfer debt from one place to another and is invariably a short term fix with long term pain. A debt consolidation loan will not reduce the amount you owe. You will still pay back 100% of the loan plus interest. This is not going to get you out of trouble and most of the time will only make things worse. Again, consolidation is not a plan to get out of debt but is instead just getting new debt to pay off old debt.
If you were to decide to consolidate, you would need to qualify first. Qualifications include equity in a home you own or other valuable, good credit and debt to income ratio. Most people burdened by debt find that even if they wanted to consolidate their debt they couldn't qualify for the loan anyway. Once you have taken out this loan, you have just gone from an unsecured debt to a secured debt - and gambling with all your assets. Consolidation loans are spread out over a 15 - 30 year period, leaving you exposed to losing your assets over the life of the loan. If you run into further difficulty in the future you stand to lose your home, car, and valuables.
The fundamental problem that people run into is that once the debts are paid off by the loan, they discover they have a new line of spending potential: empty credit cards. It's not long after these accounts are cleared that they are run up to the limit once again. This will leave you with both the consolidation loan and maxed out credit cards to repay. How are you going to repay the loan and the credit cards when you were unable to pay the previous debt in the first place? You will find yourself back in the bank for a second consolidation loan, extending your debt and making your debt problem even worse.
Bear in mind that being in debt leaves you with less cash you need to buy and plan for life's necessities. Although a consolidation loan may give you a lower payment and a little more breathing room, consolidation is not going to leave you with the cash to get you and your family through the next 10 to 30 years.
Consumer Credit Counseling Services (CCC) - Feeling of False Security
Consumer Credit Counseling Services (CCC) programs have a failure rate of 85%. They simply aren't effective. Here's why; you meet with a counselor who analyzes your monthly budget. The counselor will submit a proposal to your creditors for a reduction in the interest rates. You would then pay a monthly payment to them and they would then distribute that monthly payment to your creditors. These programs generally take 5-7 years to complete. The theory here is that your overall payment per month is lower due to the counselor's success at obtaining lower interest rates and more favorable terms with the credit card companies and banks. This approach is most often recommended by the banks themselves.
Here are the facts: CCC Services were created in the late 1970's when credit card and loan companies began to notice that many people were having problems making their minimum payments and defaulting on their debt. In short, the so-called "non-profit" companies are owned by the credit card companies and banks! CCC agencies are funded by commission by the credit card companies based on the debt recovered from you, normally around 12 - 15%. This means that for every $1,000 you give them, they can take as much as $150. If you're paying them a service fee of $20 per month, and the creditors are paying them $75, you can quickly see that CCC agencies are not working for you but for the creditors.
In addition, you have no insight into what the CCC agency is doing on your behalf and no control over the repayment process. They send in their single monthly payment, with no idea of how much is going to which creditor. Since most counselors are busy people who work based on high volume, getting a return phone call can be difficult.
It's key to know that with CCC programs, you still pay 100% of the debt plus a lower interest rate. The debt you walk in the CCC is what you walk out with. With all things considered, it works out to be about the same as your current minimum payments.
Bankruptcy - The Last Straw
Today more people than ever are turning to personal bankruptcy as a way of solving their financial problems. Estimates indicate that 2003 will see nearly 1 in 70 Americans filing for bankruptcy. People owing as little as $5,000 are unknowingly filing, not knowing of alternative methods of eliminating their debt
Click Here!. The reason people take this hasty action with such a low debt amount is the harassment and overwhelming pressure from impatient collectors trying to recover their money. In the case of Consumer Credit Counseling agencies, once they find that they are unable or unwilling to help, they will suggest bankruptcy as the answer - unconcerned of the effect it will have on your future.
In bankruptcy, a court order forces all commercial creditors to cease and desist from attempting to collect the debts you owe them. Depending on the bankruptcy declared (Chapter 7 or 13), it stops wage garnishment, reverses judgments, and generally wipes out debt.
For some people, bankruptcy is the only sensible option. If you have $60,000 in debts, and you'll never earn more than $1,200 per month, then you're broke! The sooner you eliminate the debt, the sooner you'll have a fresh start. With more than 1.4 million bankruptcy filings in 2000, Congress is passing legislation that will make it tougher to declare bankruptcy.
In bankruptcy, certain personal property is treated as exempt. The banks and creditors cannot touch that property in attempting to recover the money owed to them. Your home, car and other personal effects like clothing, and other assets are considered exempt, but this varies from state to state. Any property that is not exempt is liquidated and distributed to the creditors under the supervision of the court. Since most people entering bankruptcy have only exempt property anyway, there's usually nothing left to distribute, so the creditors typically get nothing.
Seems like a good deal? Many people mistakenly see bankruptcy as a good, low cost way to rid themselves of debt. There are other costs associated with bankruptcy that make it a very bad solution for most people. The cost of filing bankruptcy itself is minimal. Depending on what state you live in, you can expect to pay anywhere from $400 on up to $1,600 for the whole process. That's just the beginning. The bankruptcy will stay on your credit report for 10 years - and on your court records for 20 years. The seemingly "low cost" method will cost you dearly as it will follow you for the rest of your life. If you ever apply for a loan, job, apartment or insurance, one of the first questions normally asked is "Have you ever filed for bankruptcy?" And, for the rest of your life, you'll have to answer "Yes."
You might be able to eliminate your debt, but the effects emotionally and the effect on your personal life will last for many years to come. Consider applying for a terrific job after you have filed bankruptcy. These days, employers will run a credit report to determine how you faired financially. This will effect whether the employer will give you that dream job or not. Even if you do get the job and your employer later runs a credit report on you, you will still have to explain the bankruptcy. While employers can't fire you because of a bad credit report, they can certainly limit your future promotions.
Future purchases are affected as well; after several years, you may opt to purchase a home. If you're in sufficient shape at that point to qualify for a mortgage, you'll pay a higher interest rate than the average consumer who has never filed for bankruptcy. Assume you want to purchase a $100,000 house a few years after filing bankruptcy. You make a $10,000 down payment. This will result in applying for an $80,000 mortgage. While your "good credit" neighbor would obtain an interest rate of 4.5%, you would get a rate of 7%. While it seems that the extra 2.5% difference is not bad for having filed bankruptcy in the past, it's what you will pay monthly where you will feel the pinch. That extra 2.5% on a mortgage will increase your monthly payment by $200 per month with the total of your payments reaching more than $70,000 over the 30-year life of the mortgage.
Besides being a devastating blow to your credit, a bankruptcy can also be a very stressful and embarrassing decision to continually have to explain to every potential lender. If you have no choice, then you should proceed, understanding the consequences. However, the majority of people who take this method of debt elimination don't know what they're getting themselves into or the consequences thereafter. They are desperate, and they get talked into filing bankruptcy by the collectors or attorney without understanding the impact on their financial future.
Keep in mind that personal bankruptcies are usually unnecessary as there are better options available. Many people are forced, against their wishes, to file bankruptcy to protect themselves from aggressive creditor tactics or attorney. Ultimately, bankruptcy still means failure to employers and creditors.
Debt Negotiation - Light at the End of the Tunnel
Few people realize that there is another solution to burdensome debt, an approach that levels the playing field between you and your creditors, without having to go to court. The debt negotiation strategy will put you back on the road to financial freedom and in control of your life again.
The Negotiation Strategy allows you to turn that $25,000 of credit card debt into $12,500 or even as little as $9,000. In most cases, our clients have debts totaling $8,000 and have successfully saved them thousands while maintaining a reasonable credit rating. With a professional debt negotiator working for you, your debt can be cut in half or less.
How it works: Put yourself in the shoes of a manager of a collection department for a major credit card company. You know that bankruptcies are at an all-time high and that the chances of collecting on the outstanding debt worsen as the debt ages. You have the opportunity to close your books on a delinquent account by collecting 50 pennies for every dollar owed by the debtor, or take a chance on never collecting a single penny by trying to hold out for the full value. You also realize that once the debt leaves your bank (usually after six months or so), it will go to a third-party collection agency. The agency will take at least 15%-20% commission right off the top of whatever they collect, and they are unlikely to collect more than 70% of the debt even with the most aggressive tactics. So you'll probably never retrieve much more than half the money anyway. When you look at it this way, collecting 50% now doesn't seem like such a bad deal.
The way it's described, it sounds easy. You might be thinking, "I'll the collectors and do this myself." You'll reach the "customer service team" and the representative will inform you that other banks may settle for 50%, but their bank never settles under any circumstances. Of course, they do have that "great" hardship program for you. After you've called a few times and received the same treatment, you'll probably end up with the idea that debt negotiation doesn't work. The banks will rarely take a debtor seriously. They simply don't believe you and they think your hardship story is phony. The banks are quite prepared for the amateur do-it-yourself negotiator. They have the telephone scripts set up so that by the time the conversation is over, you will feel guilty about the money owed, and their lame hardship plan sounds like a great deal after all.
Having a third-party professional on your side makes all the difference in the world. Once your creditors realize that they are talking to a professional, someone who knows the laws and regulations, they quickly change their tune. A negotiator will obtain better results than you could ever obtain on your own, simply because all of the bank's tactics are stymied by the fact that they can't talk directly to you. They can't apply psychological pressure to you since this is filtered out by your Professional Debt Negotiator.
Consider this: Creditors pull out all the stops when you fall behind. They have gangs of collectors ready to pressure you with carefully scripted techniques and mind games. They have attorneys and collection agencies ready to step in and go after you full throttle. You need to level the playing field. The best and only way you can concentrate on improving your financial future is to let a professional deal with the aggravation of the nonstop phone calls. Bottom line - If you're looking for the most effective, low-cost, and fastest way to terminate your debt problem once and for all - Negotiation is the answer.
About The Author
Drakeport Financial will host a free Debt Management Seminar for people who wish to correct existing debt problems or avoid the possibility of such problems developing in the future. Seminars are held Saturday mornings from 9 to 11 a.m. at locations throughout the United States. Call Drakeport Financial today toll free at 866-676-4945 for more information. You may also visit the website: [http://www.drakeport.com]www.drakeport.com
[mailto:custsupport@drakeport.com]custsupport@drakeport.com
Article Source: [http://EzineArticles.com
By Brian Sabalinski
Honorably and ethically rid yourself of burdensome debts using the little known Negotiation Strategy, without having to experience the loss of control and privacy associated with filing for bankruptcy, consolidation, or credit counseling.
The inability to reduce debt and saving money are the two biggest obstacles preventing Americans from living financially sound lives. National statistics show that money problems play a role in 80 percent of all divorces. One in 54 households will declare bankruptcy. Debt is at an all-time high, particularly credit card debt. The total amount of consumer debt in the United States is nearly $1.4 trillion.
If you are one of the millions of Americans burdened with debt and have trouble making those never-ending monthly payments, help is available. You don't need to go it alone. If you are a typical American family, you have $25,000-$30,000 worth of credit card debt (excluding mortgages, car loans, and student loan payments), and you're paying $500 to $900 every month in endless minimum payments.
Like you, many people continue making their minimum monthly payments believing that they are making progress. They are living in a state of denial saying "Someday, somehow, something will happen. Things will get better, and my debt problem will be gone." Then years go by and they only find themselves in a downward spiral getting nowhere. They have paid their creditors thousands of dollars but their debt load never gets lighter. For example, if you were to continue making minimum payments on a $9,000 debt, and not add any more debt, it will take you over 10 years to pay it off. You will end up spending many thousands more than the original amount and 80% of the money paid will have gone to interest and fees. Most people add more debt as they go, so the reality is this - Without an aggressive approach to terminating debt once and for all, you will NEVER get rid of debt.
Today, people have options. There are four strategies for dealing with problem debt you will see advertised: Debt Consolidation, Consumer Credit Counseling Services (CCC), Bankruptcy, and Debt Negotiation. Each strategy must be considered carefully!
Debt Consolidation - The Common Approach
Unfortunately debt consolidation is the most common solution people think of when they fall victim to financial problems. It is a sad fact that about 75% of people who consolidate their debt find themselves in much deeper financial trouble than they were in to begin with. All consolidation loans do is transfer debt from one place to another and is invariably a short term fix with long term pain. A debt consolidation loan will not reduce the amount you owe. You will still pay back 100% of the loan plus interest. This is not going to get you out of trouble and most of the time will only make things worse. Again, consolidation is not a plan to get out of debt but is instead just getting new debt to pay off old debt.
If you were to decide to consolidate, you would need to qualify first. Qualifications include equity in a home you own or other valuable, good credit and debt to income ratio. Most people burdened by debt find that even if they wanted to consolidate their debt they couldn't qualify for the loan anyway. Once you have taken out this loan, you have just gone from an unsecured debt to a secured debt - and gambling with all your assets. Consolidation loans are spread out over a 15 - 30 year period, leaving you exposed to losing your assets over the life of the loan. If you run into further difficulty in the future you stand to lose your home, car, and valuables.
The fundamental problem that people run into is that once the debts are paid off by the loan, they discover they have a new line of spending potential: empty credit cards. It's not long after these accounts are cleared that they are run up to the limit once again. This will leave you with both the consolidation loan and maxed out credit cards to repay. How are you going to repay the loan and the credit cards when you were unable to pay the previous debt in the first place? You will find yourself back in the bank for a second consolidation loan, extending your debt and making your debt problem even worse.
Bear in mind that being in debt leaves you with less cash you need to buy and plan for life's necessities. Although a consolidation loan may give you a lower payment and a little more breathing room, consolidation is not going to leave you with the cash to get you and your family through the next 10 to 30 years.
Consumer Credit Counseling Services (CCC) - Feeling of False Security
Consumer Credit Counseling Services (CCC) programs have a failure rate of 85%. They simply aren't effective. Here's why; you meet with a counselor who analyzes your monthly budget. The counselor will submit a proposal to your creditors for a reduction in the interest rates. You would then pay a monthly payment to them and they would then distribute that monthly payment to your creditors. These programs generally take 5-7 years to complete. The theory here is that your overall payment per month is lower due to the counselor's success at obtaining lower interest rates and more favorable terms with the credit card companies and banks. This approach is most often recommended by the banks themselves.
Here are the facts: CCC Services were created in the late 1970's when credit card and loan companies began to notice that many people were having problems making their minimum payments and defaulting on their debt. In short, the so-called "non-profit" companies are owned by the credit card companies and banks! CCC agencies are funded by commission by the credit card companies based on the debt recovered from you, normally around 12 - 15%. This means that for every $1,000 you give them, they can take as much as $150. If you're paying them a service fee of $20 per month, and the creditors are paying them $75, you can quickly see that CCC agencies are not working for you but for the creditors.
In addition, you have no insight into what the CCC agency is doing on your behalf and no control over the repayment process. They send in their single monthly payment, with no idea of how much is going to which creditor. Since most counselors are busy people who work based on high volume, getting a return phone call can be difficult.
It's key to know that with CCC programs, you still pay 100% of the debt plus a lower interest rate. The debt you walk in the CCC is what you walk out with. With all things considered, it works out to be about the same as your current minimum payments.
Bankruptcy - The Last Straw
Today more people than ever are turning to personal bankruptcy as a way of solving their financial problems. Estimates indicate that 2003 will see nearly 1 in 70 Americans filing for bankruptcy. People owing as little as $5,000 are unknowingly filing, not knowing of alternative methods of eliminating their debt
Click Here!. The reason people take this hasty action with such a low debt amount is the harassment and overwhelming pressure from impatient collectors trying to recover their money. In the case of Consumer Credit Counseling agencies, once they find that they are unable or unwilling to help, they will suggest bankruptcy as the answer - unconcerned of the effect it will have on your future.
In bankruptcy, a court order forces all commercial creditors to cease and desist from attempting to collect the debts you owe them. Depending on the bankruptcy declared (Chapter 7 or 13), it stops wage garnishment, reverses judgments, and generally wipes out debt.
For some people, bankruptcy is the only sensible option. If you have $60,000 in debts, and you'll never earn more than $1,200 per month, then you're broke! The sooner you eliminate the debt, the sooner you'll have a fresh start. With more than 1.4 million bankruptcy filings in 2000, Congress is passing legislation that will make it tougher to declare bankruptcy.
In bankruptcy, certain personal property is treated as exempt. The banks and creditors cannot touch that property in attempting to recover the money owed to them. Your home, car and other personal effects like clothing, and other assets are considered exempt, but this varies from state to state. Any property that is not exempt is liquidated and distributed to the creditors under the supervision of the court. Since most people entering bankruptcy have only exempt property anyway, there's usually nothing left to distribute, so the creditors typically get nothing.
Seems like a good deal? Many people mistakenly see bankruptcy as a good, low cost way to rid themselves of debt. There are other costs associated with bankruptcy that make it a very bad solution for most people. The cost of filing bankruptcy itself is minimal. Depending on what state you live in, you can expect to pay anywhere from $400 on up to $1,600 for the whole process. That's just the beginning. The bankruptcy will stay on your credit report for 10 years - and on your court records for 20 years. The seemingly "low cost" method will cost you dearly as it will follow you for the rest of your life. If you ever apply for a loan, job, apartment or insurance, one of the first questions normally asked is "Have you ever filed for bankruptcy?" And, for the rest of your life, you'll have to answer "Yes."
You might be able to eliminate your debt, but the effects emotionally and the effect on your personal life will last for many years to come. Consider applying for a terrific job after you have filed bankruptcy. These days, employers will run a credit report to determine how you faired financially. This will effect whether the employer will give you that dream job or not. Even if you do get the job and your employer later runs a credit report on you, you will still have to explain the bankruptcy. While employers can't fire you because of a bad credit report, they can certainly limit your future promotions.
Future purchases are affected as well; after several years, you may opt to purchase a home. If you're in sufficient shape at that point to qualify for a mortgage, you'll pay a higher interest rate than the average consumer who has never filed for bankruptcy. Assume you want to purchase a $100,000 house a few years after filing bankruptcy. You make a $10,000 down payment. This will result in applying for an $80,000 mortgage. While your "good credit" neighbor would obtain an interest rate of 4.5%, you would get a rate of 7%. While it seems that the extra 2.5% difference is not bad for having filed bankruptcy in the past, it's what you will pay monthly where you will feel the pinch. That extra 2.5% on a mortgage will increase your monthly payment by $200 per month with the total of your payments reaching more than $70,000 over the 30-year life of the mortgage.
Besides being a devastating blow to your credit, a bankruptcy can also be a very stressful and embarrassing decision to continually have to explain to every potential lender. If you have no choice, then you should proceed, understanding the consequences. However, the majority of people who take this method of debt elimination don't know what they're getting themselves into or the consequences thereafter. They are desperate, and they get talked into filing bankruptcy by the collectors or attorney without understanding the impact on their financial future.
Keep in mind that personal bankruptcies are usually unnecessary as there are better options available. Many people are forced, against their wishes, to file bankruptcy to protect themselves from aggressive creditor tactics or attorney. Ultimately, bankruptcy still means failure to employers and creditors.
Debt Negotiation - Light at the End of the Tunnel
Few people realize that there is another solution to burdensome debt, an approach that levels the playing field between you and your creditors, without having to go to court. The debt negotiation strategy will put you back on the road to financial freedom and in control of your life again.
The Negotiation Strategy allows you to turn that $25,000 of credit card debt into $12,500 or even as little as $9,000. In most cases, our clients have debts totaling $8,000 and have successfully saved them thousands while maintaining a reasonable credit rating. With a professional debt negotiator working for you, your debt can be cut in half or less.
How it works: Put yourself in the shoes of a manager of a collection department for a major credit card company. You know that bankruptcies are at an all-time high and that the chances of collecting on the outstanding debt worsen as the debt ages. You have the opportunity to close your books on a delinquent account by collecting 50 pennies for every dollar owed by the debtor, or take a chance on never collecting a single penny by trying to hold out for the full value. You also realize that once the debt leaves your bank (usually after six months or so), it will go to a third-party collection agency. The agency will take at least 15%-20% commission right off the top of whatever they collect, and they are unlikely to collect more than 70% of the debt even with the most aggressive tactics. So you'll probably never retrieve much more than half the money anyway. When you look at it this way, collecting 50% now doesn't seem like such a bad deal.
The way it's described, it sounds easy. You might be thinking, "I'll the collectors and do this myself." You'll reach the "customer service team" and the representative will inform you that other banks may settle for 50%, but their bank never settles under any circumstances. Of course, they do have that "great" hardship program for you. After you've called a few times and received the same treatment, you'll probably end up with the idea that debt negotiation doesn't work. The banks will rarely take a debtor seriously. They simply don't believe you and they think your hardship story is phony. The banks are quite prepared for the amateur do-it-yourself negotiator. They have the telephone scripts set up so that by the time the conversation is over, you will feel guilty about the money owed, and their lame hardship plan sounds like a great deal after all.
Having a third-party professional on your side makes all the difference in the world. Once your creditors realize that they are talking to a professional, someone who knows the laws and regulations, they quickly change their tune. A negotiator will obtain better results than you could ever obtain on your own, simply because all of the bank's tactics are stymied by the fact that they can't talk directly to you. They can't apply psychological pressure to you since this is filtered out by your Professional Debt Negotiator.
Consider this: Creditors pull out all the stops when you fall behind. They have gangs of collectors ready to pressure you with carefully scripted techniques and mind games. They have attorneys and collection agencies ready to step in and go after you full throttle. You need to level the playing field. The best and only way you can concentrate on improving your financial future is to let a professional deal with the aggravation of the nonstop phone calls. Bottom line - If you're looking for the most effective, low-cost, and fastest way to terminate your debt problem once and for all - Negotiation is the answer.
About The Author
Drakeport Financial will host a free Debt Management Seminar for people who wish to correct existing debt problems or avoid the possibility of such problems developing in the future. Seminars are held Saturday mornings from 9 to 11 a.m. at locations throughout the United States. Call Drakeport Financial today toll free at 866-676-4945 for more information. You may also visit the website: [http://www.drakeport.com]www.drakeport.com
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