Debt settlement company » Debt Negotiation

Compare Debt Counseling Services

admin — Tue, 01 Mar 2011 22:01:56 +0000

Debt relief means full or partial exemption from repaying debt, or slowing a debt payment. A variety of debt management programs are available for debtors and it can be increasingly difficult to choose a program. Debtors, who are unable to sort their financial problems on their own, prefer to seek advice from professional debt relief companies. The search for a good and reliable debt counseling service can be very exhausting. The best way to find a good counseling company is to research, compare, and contrast them against each other.

It is advisable to categorize the various debt counseling companies and agencies according to the debt management programs they offer. Some agencies offer debt negotiation plans as part of their debt program. After deciding on the debt management plan, debtors can accordingly choose a suitable debt relief counseling company.

Debt management plans are generally offered by counseling companies that function on a non-profit basis. However, there are some for-profit companies that charge debtors for the services offered. Companies offering debt management programs try and negotiate the interest rates with the creditors so that most of the money can be utilized to pay off the principal amount.

Many debt consolidation companies even offer free debt consolidation quotes. However, debtors must carefully read and understand the various clauses covered in the quote. Several online companies offer free debt consolidation quotes. It is advisable to consult agencies that are accredited to either Association of Independent Consumer Credit Counseling Agencies, the National Foundation for Credit Counseling, or both.

Many credit counseling companies charge nil to manage a small or insignificant debt. A lot of counseling companies operate with the support of finance provided by financial institutions. Some counseling companies charge a fixed monthly fee for their services.

Some debt relief companies may even claim to have debt programs that involve legal procedures to terminate a debtor’s loan. However, debtors must be wary of such companies, as these may be fraudulent. It is advisable to research a company like this carefully before getting involved with them.

By: Jimmy Sturo

Debt Settlement – The Bad, the Good and the Truth

admin — Sat, 26 Feb 2011 16:49:31 +0000

So, you’re in over your head and you’re considering a route known as debt settlement (debt negotiation), whereby your creditors will agree to accept less than the full balance owed on your accounts. You’ve probably heard or read about many different opinions relating to debt settlement and you’re not sure if this is the way you really want to go. You’re probably also questioning all that you’ve heard and are likely confused and unsure of what’s fact and what’s actually fiction. So, let’s attempt to clarify the process of debt settlement by starting with the “bad.”

Obviously, your creditors will not accept less than what you owe them without a little pain on your part. Unless your accounts are already delinquent, don’t even attempt to work out a settlement agreement with even one of your creditors because it simply won’t happen. Period. Unfortunately, your accounts must be at a certain stage of delinquency prior to negotiating a settlement. If you’d like to attempt to work something out while your accounts are current, or even 30-60 days delinquent, I urge you to do so because at the very least you’ll find out the truth and realize the end result won’t be pretty. So, yes this is one of the ugly components of debt settlement. Your accounts must go delinquent, and subsequently, your credit score will be reduced for a few months.

Perhaps you’ve also heard that you may have a tax liability as a result of debt settlement. True? Maybe. You see, creditors are required by the IRS to report all canceled debt over the amount of $600 on Form 1099. Now, you may or may not be liable for income taxes as a result of debt settlement due to the fact that an “insolvency” rule exists for individuals who are classified as insolvent at the time of their various settlements. In order to be considered insolvent your liabilities must exceed your assets. If you’re not sure where you stand, I recommend that you speak with your tax professional to find out if this is the case for you.

Well, we’ve covered the negative aspects of debt settlement; now let’s take a look at the good that can result from negotiating with your creditors.

Let’s face it – if you’re considering debt settlement, you’re struggling to meet your monthly financial obligations, or your accounts are already seriously delinquent and you’re even contemplating bankruptcy. Debt settlement is an excellent alternative to bankruptcy because it allows you to become free from debt without allowing your personal information to become a matter of public record, as would be the case with a bankruptcy filing.

Additionally, while the reported delinquencies on your various accounts will have a temporary negative impact on your credit score, the effect won’t be nearly as severe as that of a bankruptcy filing. If you’ve managed to keep your accounts current, and your credit score is reduced during the process of debt settlement, your score will continually increase as your accounts reflect zero balances, which will occur with each final settlement payment. In most cases, individuals find that their credit score is back up between 600 and 700 within 6-9 months of completing the process of debt settlement.

Probably the most relevant benefit regarding debt settlement is that you’ll be free from debt. No more sleepless nights and constant worry, trying to figure out how you’ll get through the next month with a positive balance in your checking account.

Hopefully this piece has assisted you in figuring out if debt settlement is right for you. If you’re still not sure, and I have not successfully clarified “The bad, the good and the truth,” you can learn more about debt settlement by clicking here.

By: Marie Megge

Debt Settlement Letters – Examples and Tips

admin — Sat, 19 Feb 2011 19:01:15 +0000

Debt settlement letters are used by consumers to show willingness to repay debts. The goal of this letter is to negotiate with creditors to convince them to clear some of the consumer’s debt from the total and eliminate any fees that have accumulated. The lowering of interest rates is also negotiated within this letter.

The first step for negotiation between debtors and creditors concerning total debts is this debt settlement letter. Consumers can send out these letters directly or a debt settlement agency can be used. When an agency is used, letters are sent out on behalf of the consumer to the creditors.

To receive the success needed from a debt settlement letter; the first thing to learn is how to write an effective letter in a convincing yet professional manner. Before sending out a letter, it is recommended to look at all the pros and cons of the debt negotiation. Anything that is written about the debt settlement must be stated very clearly.

The main goal of a settlement letter is to lower a total repayment amount. Below are some tips for reference when writing this type of letter:

1. Make sure research is done before completing the letter. Understanding all terms and conditions of all debt is very important. Balances, interest rates, taxes, etc but all be clear.

2. When negotiating, have a figure in mind that you want to pay off.

3. It is important to have the funds available to pay for the debt before requesting the settlement.

4. After posting the debt settlement letter, a time period of waiting will be spent for the reply from the creditor.

5. If a settlement amount is rejected, a slightly higher repayment amount can be then be offered.

6. Do not stop writing to creditors until an approval is granted.

7. Begin to pay the settlement offer right away.

8. Ask for an official receipt from the creditor after payment is made.

9. Keep all correspondence with creditors.

By: Hector Milla

The Truth About Christian Debt Settlement Companies

admin — Tue, 05 Oct 2010 02:45:48 +0000

Christian debt settlement companies are in high demand, but are these companies truly religion based companies? Having debt can be very stressful for people and many individuals seek spiritual guidance as they search for the perfect way to manage their debt and find ways to live debt free.

I have always been somewhat wary of sites that say they are Christian debt help sites. In most cases, once you actually get to the site, there is no mention of religion and spirituality. I am not saying that there are no Christian debt settlement sites, but most of them use the name and do not really offer spiritual guidance.

You do have the option of getting you financial guidance one place and your spiritual guidance at another place. Debtors Anonymous offers great support for individuals that have debt and are looking for guidance in changing the way that they manage money. They offer support for people that have gotten into debt through no fault of their own as well as guidance for compulsive over spenders.

Debt settlement is a form of debt elimination that reduces your credit card balances through a negotiation process with the lender. Debt negotiation is something you can do on your own or if you have more than $10,000 in debt you can enlists the services of a debt settlement company.

Debt settlement can actually have your debts paid off in less than 3 years, but it is not without its disadvantages. The biggest of which is what it will do to your credit. It will be negatively affected. For some, this is not an issue because their credit already has negative remarks.

Are you looking for Christian debt settlement companies? Find out more about what credit card debt relief options are available and how you can achieve debt freedom quickly.

By: Marjorie Salada

What Debt Settlement Companies Do Not Tell You

admin — Sun, 30 May 2010 16:13:09 +0000

A debt settlement company negotiates on a consumer’s behalf to help them settle debt. Negotiations are made between the company and the creditor to begin the repayment of debt. If you are considering working with a debt settlement company, it is recommended that you do plenty of research before deciding on a particular company. It is easy to fall into one of many scams that are present today.

Debt settlement does look to be very appealing because of the lower interest rates and lower payments. However, it has been found that the lower payment does exist but not because it is lower, it is because the extension of the term. If the debt is carried out longer, you will have a lower monthly payment, but it is also true if you stay in debt for a longer period of time, you will end up paying more money. This is the reason why these companies stay in business and continue to succeed.

There are many things that debt settlement companies do not tell consumers:

1. It is not the same as debt negotiation.
2. Sometimes the program charges hundreds of dollars as an initial fee to set up the account, plus a monthly fee. The fees and the amount of the total debt to be paid varies with each company.
3. There are companies who take payments each month but do not pay creditors monthly. Instead, they put the money in a trust fund while negotiating and then make a lump sum payment when the debt can be paid in full.
4. Creditors may sue you and your wages could be garnished in the time it takes to complete the entire settlement.
5. It is not asked that all interest, over the limit fees and late fees be stopped from accruing.
6. Creditors are not legally obligated to listen because they are not law firms.
7. About 15% of the total debt is charged in fees upfront.
8. Debt settlement is not right for everyone who has debt.
9. Your credit will suffer with the settlement.
10. Any debt balance that is forgiven and is more than $600 is taxable income.

Before you decide on debt settlement, it is highly recommend that you research and find a company that is reliable and trust worthy. You want to feel comfortable with the company itself before you feel comfortable with them handing your debt. While this article could sound negative, be certain that there not one but several reputable companies in this field.

By: Hector Milla

10 Important Questions You Must Ask When Approaching a Debt Settlement Company

admin — Mon, 26 Apr 2010 10:25:31 +0000

Nowadays, there are too many debt settlement companies in United States and many people are facing the difficulties in identifying the genuine companies. Sometimes, the advertisements and promotions related to the service providers are misleading and many people are trapped by scams.

In order to avoid unnecessary financial risks, it is always a must for you to set appointments with the settlement companies so that you can meet up with their representatives face to face. By visiting the service providers, you will be able to know the physical locations of the companies and you can also assess their quality of services too.

I would like to share with you some important questions you must ask when you are having a personal interview with the settlement company.

1) How long has the company been established?

2) What formal certifications is the company holding?

3) Is this company affiliated with any larger organization?

4) Is this service provider a registered member of the Better Business Bureau?

5) What are the qualifications of the financial planners and debt counselors? Are they officially certified by the national organization?

6) What is their latest success rate for debt settlement?

7) Can they provide testimonials from their clients?

How much do they charge for their services?

9) Is there any upfront required?

10)What are the additional services provided besides debt negotiation?

Through the personal interview session, you will be able to assess the services provided by the representatives through their conversation, facial expressions and body language. Find out whether they are able to answer all your questions confidently. At the same time, you need to ask yourself whether you are comfortable working with them. You should only sign up the debt relief plan after you have got all the detailed information you want.

By: Jeslyn Jessy

Debt Settlement

admin — Tue, 20 Apr 2010 11:38:11 +0000

A debt settlement is an agreement between a debtor and a creditor to satisfy a debt for a reduced payoff amount. A debt settlement is usually reached when the debtor is unable to fully meet debt obligations because of financial difficulties. Debt settlement is also called debt negotiation and it means the process through which both parties reach the agreement.

Debt settlement and debt negotiation are usually for-profit businesses. Debt settlement is different from debt management firstly because debt settlement companies do not send regular monthly payments to creditors. They commonly hold consumer’s funds in separate accounts till the company believes it can settle the consumer’s debts for the less than the full amount of money owed. There are some companies that advise consumers to stop paying their debts if they want to take part in program.

Almost all companies have a minimum debt requirement. The National Consumer Law Centre took an investigation of debt settlement companies. Of their survey of thirteen debt settlement companies, nine specifically stated a minimum amount ($5,000 – $10,000) of debt required for the program. All of the investigated programs handle unsecured debt only.

The National Consumer Law Centre say the company have different ways of doing business, but almost all of them demand the consumer to set aside money monthly. Some of the debt settlement companies establish the account for the consumer or they ask the consumer to show proof of the account.

The companies want the consumer to deposit a definite amount in the account each month to create a fund that can be used to settle debts. It happens that the consumer stops making payments on his/her debts and as a result can face pressure from debt collectors. Debt settlement companies promise to assist consumers to deal with aggressive, confrontational and abusive creditors or collectors.

Most consumer debtors have less income than expenses each month. Some are able to collect some additional money from their budget each month. Debt settlement companies negotiate settlements for the consumers. They promise that consumer’s current level of unsecured debt will be skillfully negotiated, and essentially the consumers will end up paying a fraction of the debt. They also promise to reduce consumer’s debt by 40 – 60% of the current total.

Debt settlement companies set their clients with monthly payment, which is determined on a client-by-client basis between the consumer and the counselor of the debt settlement company. The duration of the program will depend on how much the debtor can afford to settle aside each month. Throughout the program the companies promise to communicate with consumers’ creditors on their behalf.

By: Den Braun

Debt Settlement Negotiation – How to Take on the Credit Card Company and Eliminate Debt

admin — Sat, 17 Apr 2010 14:07:39 +0000

Do you feel low? Feel like nobody else is steeped in financial debt the way you are? And of course, you feel there is no way out… well, think again. The government is aware of the tremendous impact recession has had on the economy, and has taken steps to realistically maintain the economic balance in the United States. People have lost their jobs and have even suffered a slash in salaries. Lifestyles had to be changed, and most are unable to meet even their basic requirements, let alone the credit card debts. The government thought it apt to help out, and in doing so, has legalized the set up and services of debt consolidation and debt settlement companies to function as a mediator between the debtor and creditor.

There are hundreds of companies that have been set up to lend a helping hand and get customers out of credit card debt. They study the customers’ credit history and financial situation and then plead the debtors’ case on their behalf. These companies share a sound professional relationship with the credit card companies and can negotiate with the company to get the best reduction in the debt amount for the customer. They are able to consolidate the debt amount and negotiate to get a reduction of approximately 50 percent on the amount to be repaid. This gives the customer a chance to keep aside surplus money that he or she saves each month and slowly but surely collect enough funds to clear the debt as per the amount agreed to by the debt settlement agency and credit card company after a series of healthy negotiation.

Before going ahead with a particular debt settlement company, study the companies in the market. Check and cross-reference company information to check for legitimacy. There are hundreds of fake companies who will advertise themselves on the internet, fool customers into signing up with them, and even extract fees before rendering any services. Checking the success and legitimacy with financial institutions, friends and relatives who have availed the services of the company before, is a great way to extract the correct information.

By: Sankalan Baidya

How to Eliminate Unsecured Credit Card Debt

admin — Tue, 06 Apr 2010 08:02:57 +0000

Everyone’s debt situation is unique and determining what will work best for you begins with categorizing your debt. Whether your debt is secured or unsecured significantly effects the measures you can take to eliminate debt.

Secured debt is a loan which is “secured” by property. Simply put, if the bank can come and take something from you if you don’t pay (ie; home, car) then the debt is secured.

Unsecured debt is the most common type of debt and is typically in the form of credit card debt.

Eliminating Unsecured Debt

The three most common ways to eliminate unsecured debt are

1. paying as agreed

2. bankruptcy

3. reaching a settlement with the creditor for less than the balance due – also known as debt settlement or debt negotiation

Bankruptcy is rarely a viable option. Due to the changes to the Bankruptcy Law in 2004 by the Bush administration, estimates are that less than 10% of people who file for bankruptcy are successfully discharging any debt. Most have to pay it back now under Chapter 13.

Credit Counseling and Debt Consolidation services typically focus on eliminating your debt by settling with your creditor for less than the balance due. These services are typically owned by large banks and credit companies and typically charge a fee. The good news is, this is something you can do on your own.

Settle For Less than the Balance Due

The key to a successful settlement is leverage. If a bank thinks they can get more out of you, they will not settle. This means that you may have to go months without making any payments. This will reflect poorly on your credit report and affect your credit score, but it is a necessary to obtain a good settlement.

During the time you are not making payments to the credit card company they will constantly attempt to contact you to discuss it. This is best dealt with from the very beginning by sending them a letter requesting that they only contact you in writing. Also, it is very important that you familiarize yourself with your rights under the Fair Debt Collections Practices Act and the Fair Credit Reporting Act. Collections representatives often behave in unscrupulous ways and knowing your rights is your key to fighting back.

Once you have sufficient leverage against the company it is time to attempt a settlement. A realistic goal would be to settle the debt for between 35%-50% of the balance. Contact the bank or credit card company directly and they will likely transfer you to their collections department. Once in touch with the collections representative simply let them know you wish to resolve the debt. Typically, they will make you an offer to settle for 65%-80% of the balance before you ever make an offer to pay. Let them know what you do have; an initial offer of 15%-25% of the balance is reasonable. They may tell you no or tell you that they have to speak with their manager but continue the negotiation as necessary to settle within the range that you desire.

Some credit companies are more apt to settle than others. For instance, American Express can be a very difficult company to settle with for less than 60%. Search the internet for information on your particular bank or credit card company to see how others have fared.

By: Adam Tijerina

The Truth About Debt Negotiation (Settlement)

admin — Sun, 04 Apr 2010 17:34:37 +0000

LOWER YOUR PAYMENT BY 50% – You’ve seen the ads. They certainly are enticing especially when you are buried under a mound of debt. But should you do it? What’s this all about?

Chances are they are talking about debt negotiation or debt settlement. Is debt negotiation right for you? What are the pros and cons of debt settlement?

Many readers have commented about debt negotiation. The following, therefore is from numerous contributors and by permission. The content is intentionally both pro and con as the nature of these comments is based upon offering pointers for negotiation and settlement from those who have already experienced debt settlement.

CAUTION

But before offering comments from those who have been there I feel compelled to offer warnings about debt negotiation or debt settlement . A recent ad touts the excited relief of a young lady who is sooooooo at peace because her agency eliminated 60% of her credit card debt. I am not a credit card industry fan but a few issues are painfully absent from the ad.

First, consider yourself as the creditor. What would entice you to accept less than the full amount of the original debt. The only enticement I can think of is if the creditor believes he/she will not get anything more. The only way to make that strong argument is to stop making payment for a few months. In other words, the debtor’s credit history is trashed.

Secondly, you may owe income tax on the debt forgiven. Any write off of $600 or more is considered income to you, the consumer. The creditor will send you and the IRS a Form 1099-C at the end of the tax year and the amount forgiven will be considered added income by the IRS.

Third, there is no guarantee that any forgiven debt will not come back to haunt you in later years. It is possible full payment could still be expected in the future.

Finally, unless agreed to by the creditor, any negative comment placed on your credit report will remain for 7 plus years.

COMMENTS FROM OTHERS

Sound advice for anyone contemplating the use of any debt management services
Anyone who plans on using a 3rd party to handle their finances, should check them out with the BBB and State Attorney General’s Office of Consumer Protection services have mislead people about the impact the service would have on their credit rating, the fees involved, and the possibility of legal action from the creditors. On a debt management program, it’s important for people to know that their credit will be impacted- negatively for some lenders…. It’s important to know the fees. Is there: a monthly charge… a set up charge… a penalty for leaving the program? Are these fees mandatory? Genuine non-profits should not have mandatory fees.

The last thing to emphasize is that the creditors can take legal action against debtors even if they are using a debt management service….”

Settlement not the same as Chapter 13.

“… However, there are real differences: First, settlement is not a public record. Your credit record is not public. There is no record in the judicial court to show that you have settled the accounts. However, bankruptcy record is a public record. Second, if you settle, you answer “No” to the question, “Have you ever filed bankruptcy?”

You really do have to be quite delinquent on your payments.

“Not every call went the same. Some would accept my 50% offer. Some needed some prodding. Some, I hinted at bankruptcy. Some wanted to know the reason behind my situation. I wasn’t always honest with them, they never seemed to double check anything I said.

“I would seriously suggest though that you be close to 6 months delinquent. Keep in mind though, that if your credit is good now, it won’t be after these types of lates. In my personal situation, my score was so low, that it shot up just by virtue of getting thousands of dollars off my debt.

“Be prepared to do a little haggling. Always offer less than your actual goal. Be prepared to pay over the phone. But also refuse to do anything until you see an offer in writing. Remember, they have to believe that 50% of your money is better than 0% of your money.

“All in all, it was an extremely easy process. Certainly I would always recommend someone do it himself or herself. You can pay someone hundreds, or thousands, of dollars to make phone calls you can make yourself.

“Also, keep in mind there are tax implications for settling. “

Stages of Settlement

“… Also in the early stage, the offer of settlement (if at all) is usually around 70-75%. [XYZ Company] offered me settlement in that range when my account is 30 days past due. I think only in late stage of delinquency, you will get an offer like 50% settlement.

“But if you do a calculation, a 50% settlement after 6 months delinquency is not necessarily cheaper than a 70-75% settlement after 1 month delinquency. The bank will still charge you interests, late payment penalty, or even over limit fee (if applies) while your account is in delinquency.”

Settlements are not a good route

“… Settlements are reported to the bureau as ‘paid ‘. This is not ‘paid as agreed’ as you would want, but instead showing that you had to settle instead of paying off the full balance. This stays on your credit report for 7-10 years and lowers your overall credit score dramatically. If at all possible, I would try to work out a repayment plan to get out of debt. If the interest rate is too high and you cannot reasonably get out of debt in the next 5 years, you might want to look into credit counseling. Again, this is a short-term pain long-term gain philosophy. “

55% is pretty good!

“… 55% is a pretty good offer. They always want you too settle on the spot. I never agreed to anything without something in writing. I even went so far as to hold on the phone for 15 minutes while they typed up an agreement and faxed it to me, making small talk to the guy the whole time. I then gave them my information and did a check over the phone.

“I am pretty passionate on this issue. Those that give you gloom and doom scenarios for settlements make me a tad heated. My opinion is that suffering under large sums of debt is complete and total financial suicide. These are debts that you will carry on your back for years and years and years making the minimum payments, all the while having charges added to your accounts. Accounts never ever seem to get smaller.

Get out of debt any way you can!

“GET OUT OF DEBT ANY WAY YOU CAN! My score was in the bottom 1% of scores. A year after settling all my accounts (about 50k of debt) my score is way up, as is my wife’s, and we just bought a house with a no-money-down loan.

“Had we followed the advice of those that tout credit score over everything, we would still be killing ourselves making the monthly payments, hoping 10 years from now to have some relief. Now all of our debts are paid off, we have only mortgage, and monthly utilities, and we’re able to save almost $1,000 a month. Now THAT is something my family could have never done had we been scrapping for the next eternity, trying to pay off thousands of dollars of debt $20 at a time.

“What in the world good does a great credit score do when you can’t even pay your bills each month? Get out of debt first, then start worrying about buying a house, or a new car, etc. Claiming a high credit score, while wasting hundreds of dollars every month on 21% interest is lunacy, in my opinion.”

Negotiating company can do NO BETTER than you can do yourself

“I’m convinced after doing all my own negotiating myself, if an account has not had legal action taken against it, a negotiating company can do NO BETTER than you can do yourself.

“I negotiated about 50k in debt and paid it at about .50 cents on the dollar. One account charged-off and they wouldn’t talk to me. So after a suit had been filed I hired a ‘law-firm’ (debt negotiator) to represent me. The account was about $5,500, but they had added court costs of about $1,200. Finally negotiated these terms. Court costs dismissed, and $175/month, 10% interest on a balance of $5,700.

Attorney Robin Leonard

Attorney Robin Leonard in his book Money Troubles from Nolo Press offers the following debt negotiation tips.

Be honest but paint the bleakest picture of your finances. Elaborate on any illness, layoff, accidents, repossessions, back taxes, etc.

If considering bankruptcy, say so. But do not incur any other debt after saying so. If you do you may not be able to discharge them in bankruptcy.

Never disclose where you work or bank. If you are later sued by this same person and get a judgement against you, you have just made their job that much easier. Simply answer the question, “No comment”.

Rather than sending a check from your bank, get a money order or cashier’s check so as to protect the name of your bank.

If considering a lawyer, remember that though a lawyer carries clout and can do a good job, they cost money. Don’t hire one unless you owe a great deal and have a reasonable chance of a very good deal. If you have to pay a lawyer, sometimes what you save in settlement you lose.
If contacted by more than one creditor for the same debt, it probably means the debt was sold a second time and you have avoided the first collector superbly well. In other words you are very difficult to get hold of and it is a very old debt. Many secondary and tertiary collectors at this stage might be willing to accept 33-50 cents on the dollar and possibly even less.

If the collector agrees to settle for less, be sure it is also agreed to indicate “satisfied in full” in your credit report.

If the collector agrees to far less than the original amount, make sure the deal makes financial sense.

Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini-course via e-mail. You can enroll at Debt Free In 7.5 Years.

By: Michael Killian