Saturday, January 22nd, 2011
A debt settlement program or debt arbitration is considered successful when both the debtor and the creditor reach an agreement. The agreement is that the debtor will pay a lesser amount than is owed and this will be considered payment in full. This will not work as long as you continue to make the minimum payments due, as many do regularly in their credit card debt. But if you stop making any payments at all when the late fees and interest start to add up you will be able to discuss a settlement on the original amount.
Do It Yourself or Hiring a Debt Settlement Company?
There are companies that can do this for the debtor. Many people prefer this because they are not sure enough of their ability to negotiate the right amount or they may feel ill at ease dealing with these problems. Some of the settlement companies will charge an upfront fee while others may charge a monthly fee. There are also those who charge after the settlement of the debt. They may get a percentage of the debt that is negotiated off the entire amount.
A debt settlement program differs from a debt consolidation program. The consolidation program will require that you take another loan to pay off the bills that are causing your financial problems. While this is beneficial for consolidating all your loans into one loan there are often stipulations to which you may not want to agree. Committing to an agreement to allow a foreclosure of your home to pay the loan if you default is one such stipulation.
This is because typically to get the loan you have to put up collateral which is often your home. Yes, you should get a lower interest rate but in the end if you cannot make the payments on this loan, you stand the chance of losing your home. Debt consolidation may be a good idea for some, especially with the state of the economy today. But jobs are not 100% secure and the possibility of losing your home is very real.
Is Bankruptcy An Option?
Bankruptcy is another alternative if you have gotten yourself in so deep there seems no way out of debt. However, the type of bankruptcy you declare is important. Chapter 7 will sell your assets such as your home to pay off your debts. So, you may end up losing your home using this method. Chapter 13 will allow you to keep your home and any other assets such as a vehicle if you make your payments to the bankruptcy court and the lender of your mortgage. If you default on these payments, the creditors can ask for a lift of the bankruptcy and file foreclosure or for repossession of a vehicle.
The disadvantage of a bankruptcy over a debt settlement program is the bankruptcy will stay on your credit report for 7 to 10 years. While in bankruptcy the debtor may not apply for credit cards or credit from any source without asking for permission from the bankruptcy court. This is not likely anyway because most creditors are leery about lending to someone who is in bankruptcy.
When it comes to debt consolidation, the impact on your credit may not be good. As a matter of fact, not all loan consolidation companies report your payments to the credit bureaus. So deciding between the options that are open to you can take some time and thought. With a debt settlement program normally the payments you make will show on your credit report even if they are settlement payments, it does show you made an effort, which is a positive thing when viewed by future possible lenders.
By: Jon Arnold
Tags: Creditor, Debtor, Interest Rate
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Friday, November 12th, 2010
One way of getting out from under all of your credit card debt is through credit card debt negotiation. In this process, you can contact your debtor and get them to settle your debt for a fraction of what you owe.
Though this will hurt your credit rating, it is a far better option than not paying at all or declaring bankruptcy. Those two options will make it very hard for you to get decent rates on future loans and make it hard for you to get a loan period.
Credit card debt negotiation is a very delicate process, involving a bit of give and take from both sides. You don’t have the money to continue making payments over the long term, but the credit card company wants their money back.
The truth is, credit card companies would rather have you pay something and sever the relationship, rather than keep your debt with them, dragging things out with no intention of paying. They don’t want to pay collection agencies to track you down; they would rather just cut their losses.
Many times it can help to employ the services of a debt settlement company through a debt negotiation program, but sometimes you can negotiate with creditors yourself and find positive solutions. If the debt negotiation is successful, it will save you not only money due to reduction in APR but also the hassle that is associated with looking for a new credit card to transfer balance.
If you are negotiating credit card debt by yourself the first thing that you need to do is find a proper mailing address for your credit card company to send all correspondence to. Don’t use the address on your bill, as that is for payment only. Once you have an address that is where you should send all correspondence regarding your negotiations.
Make sure you use registered mail with receipt. This paper trail forces the debtor to honor anything you can verify with mail, as opposed to phone calls, which mean nothing in court, should it come to that.
Also, it is imperative that you stay calm and conduct yourself with professionalism during credit card debt negotiation. Your debtor may try to verbally bully you, but don’t fall for any of the old tricks. Simply express your desire to settle your debt, no more, no less. Don’t include any personal information, such as why you want to settle, as that will likely get you denied.
In the end, you simply need to realize that although you got yourself in this situation for whatever reason, there is a way out. Systems have been put in place for situations such as yours; you just need to avail yourself of them. Regardless, it doesn’t hurt to call up your credit card company and ask, just make sure you follow up that call with registered mail.
By: Paul Sarwana
Tags: Collection Agencies, Correspondence, Credit Card Debt, Credit Card Debt Negotiation, Credit Rating, Creditors, Debt Negotiation Program, Debt Settlement, Debtor, Decent Rates, Declaring Bankruptcy, Hassle, Loan Period, Mail, Negotiating Credit Card Debt, Negotiations, Phone Calls, Positive Solutions, Proper Mailing Address, Settlement Company
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Monday, October 11th, 2010
Debt settlement companies make the settlement process hassle free for the debtors. Usually a settlement procedure takes several months. During this time a debtor has to deal with many different creditors. He or she has to handle the many collection and negotiation calls made by the creditors and their collection agencies. A debtor has to then analyze the terms and conditions offered by each one of them. Most of the time common debtors are unaware of their rights and end up settling for not so beneficial agreement terms. This entire procedure can be very stressful for the common debtor. Hiring a settlement company on the other hand ensures that a debtor does not have to deal with the creditors at all.
The entire settlement procedure is handled by the company. They negotiate with the different creditors and reach a negotiated amount payable. Debt settlement companies are able to reduce the loan amount by almost 50%. These companies also have the know how and expertise regarding other debt reduction options like debt consolidation, conversion of unsecured debts into secured ones etc. They provide a combined package of all these procedures to the debtors to make the burden of the loan as light as possible. The settlement companies charge a reasonable fee for their services. This fee is usually a percentage of the debt amount saved and is payable after the settlement procedure is complete. Hence legitimate debt settlement companies can only make money after they have saved some for the debtor.
At the same time all good settlement companies also offer many free services to their customers. They provide advice to the debtors on how to rebuild their credit scores after a settlement. They make a list of healthy expense habits and advise the debtors on how best they can follow them. They also analyze the annual income of the debtors and compare with their necessary day to day expenses. They then chalk out a monthly budget for the debtors. By following this advice the debtors can avoid debt in the future.
By: Mary Kuriakose
Tags: Beneficial Agreement, Collection Agencies, Conversion, Credit Scores, Creditors, Debt Consolidation, Debt Reduction, Debt Settlement Companies, Debtor, Debtors, Hassle, Legitimate Debt, Money, Monthly Budget, Negotiation, Reduction Options, Settlement Company, Settlement Procedure, Unsecured Debts
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