Category Archives: Debt settlement program
There are reputed debt settlement firms providing a flurry of feasible debt settlement options and services that help you to negotiate with creditors. This is done to lower some debt. You also have the option of debt consolidation, but you must be aware of the pros and cons surrounding it. There are cases where you’ll find that even a complete debt management program is unable to pay back your debt completely. If your debt has attained a point when it’s just not possible to repay all that you owe, you can opt for debt settlement options. The firms provide a formal or organized consumer proposal alongside standard debt settlement contract.
Adherence to regulations
In the recent past, the concerned industry entailed little or no legal bindings, stringent rules or ceilings which fuelled many fraudulent and hawkish firms to do brisk and often unbridled business. The new time-bound regulations and stipulations underline the fact the settlement firms cannot collect fees until the debtors make a minimum payment to the creditor. You do this after the negotiations initiated by the settlement company. The company has to negotiate successfully, settle or reduce in some way to amend one debt’s term. There should a written settlement, associated agreement or debt management plan between the debtors and creditors. The former needs to approve of this communion.
As time passes by, you’ll find that both the options are finely tailored to the precedents of debt settlement for a given amount. It’s comparatively lesser than the one you owed. Consumers need to make a sum payment or consent to a partial repayment fixture. It’s an affirmative that debt settlement does affect your credit score or rating to a good extent, but is often more feasible and viable than a bankruptcy alternative. Creditors typically hunt for proof that you have explored every option in field. Only then will your settlement attempt be deemed feasible.
A step-wise approach
Your first step should be to seek assistance when you actually need it. For those continuing for 5-6 months sans making any debt payment, creditors get a free hand in marking and charging it off in the credit report. They can also make tax deductions related to a charge-off segment as loss. You need to know that this charge-off label is a red signal to possible or potential creditors. It’s very important to keep track of all financial records as you need to prove that you’re really unable to pay those debts off. Opening your bills and notices can be difficult during debt, but it’s clinical to stay informed about the intricacies of debt relief. Click here to know more about the same.
The related aspects
There’s no need to create a far-fetched or unrealistic plan and you must refrain from building castles in the air. There should be no slack or lassitude with records as well. Choosing the company that makes sky-high and tall promises will not fetch you anything because you need to r remember that these companies don’t have a cache of money in the backdrop. This is a fiscal ambit, which is regulated by the financial apparatus of the region.
Debt collectors are tough, seasoned professionals and they are well trained in collecting consumer debts. When you are getting regular collection calls from the different debt collectors, you need to be well prepared on how to tackle the situation and negotiate with them for a settlement amount. These collectors are talking with many people on a daily basis and they are used to hear the common reasons given by other debts, so you need to give a very convincing logic while you initiate negotiations with them.
Before starting your negotiations with the debt collectors, you need to study your sources of income, savings and the amount of your debt and how much of it can you afford to repay. Also you need to look at your current expenses and see which bills are most unavoidable and needs to be paid, while allocating the amount for repayment. You can go through your credit report provided by the credit bureaus and check for any inaccuracies or outdated information. Incorrect information on your credit report will hurt your credit scores, so get it fixed at your earliest. You should be aware about your rights as a debtor by going through the debt collection fair practices act. It will make you as an informed consumer, and if any collection agency is violating the federal or state laws, you can take immediate actions against them using the laws as your legal weapon against them.
When you start a negotiation with a creditor, start with the lowest amount and then you can increase it, as and when required. You can start with a settlement offer of 40% of your original debt, and explain them about your situation why you had fallen behind in your payments in the past and other things that forced you to get into a situation like this in the present. Do not give out your personal information like your place of work, name and address of your bank and your banking details. While talking with these people, stay calm and focused and be polite during your conversations.
It is a good idea to tell the creditors that you are recording the conversations for future proof. This will keep them in the best of their behavior. You must maintain a creditor call log and put details about every person you speak with from that company with date and time. During the negotiation process, you can ask the creditor to remove any negative information reported by them to the credit bureaus and insist them to do a fair reporting on your credit report.
Once the settlement amount is finalized, you must ask for the settlement proposal in writing with details on the new amount agreed on, new terms of the repayment, as well as any other terms agreed by both of you. Keep the information in your file for future records. Do not make any sort of payment until you have proof of the settlement offer in writing.
Debt settlement is a legitimate alternative to filing bankruptcy. If anyone is going through serious financial hardship and has overwhelming debts on their heads, it is time to get professional help.
Debt settlement consumer protection act has many benefits for the individuals. After the Federal economy was hit by the one of the biggest recessions, thousands of people became jobless in no matter of time. Many people had to go through great financial crisis. They were not able to repay their debts and became defaulters. They were eventually forced to file for bankruptcy and had to compromise with their high credit scores. Once they lost their credibility, they failed to get any good deals from the future lenders for the next 7 – 10 years that followed.
On the other hand, the creditors also took the hit of the recession. As the number of people of people filing for bankruptcy was increasing alarmingly, the creditors lost their liquidity and they failed to manage their costs. The financial equilibrium was disbalanced and almost reached the verge of bankruptcy. The economy took the biggest hit of all times and rolled further back into recession. The federal government had to take immediate steps to curb this situation.
As a part of the debt settlement consumer protection act, the government introduced tax breaks for the creditors and also released billions of US dollars into the economy. It was made public that those creditors who will agree for settlement with the consumers will get huge discount in taxes and can use the stimulus money released in the market to cover up the costs and the loss that they incur.
As a result of these changes in the laws, many creditors offered debt settlement deals and wiped out a certain percentage of the debts of the consumers. They had to incur loss but that was later covered by the government policies of tax breaks and stimulus cash.
Consumers on the other hand, were able to reduce their debts by a great margin through debt relief options. The only condition that they had to fulfill was to have an overall consolidated loan of $10,000 or more. Anything less than that is not entertained for settlement. Once a good deal is offered to the debtor, they need to pay the remaining amount of the debt to the creditor in one single payment. In this way, many consumers were benefitted by the debt settlement consumer protection act.
People having significant amount of unsecured debt more than $10,000 can try the debt settlement option as a legitimate way of eliminating their debts. You can talk with a trained debt counselor and gain more knowledge in this regard. The debt counselor will point you in the right direction as per your situation.
Debt settlement programs were once done by you/your lawyer with creditors. Today, people are overwhelmed with rising mortgage rates, losing a job, rising credit rates and higher prices in utilities, food, and gas. Many found themselves deep in debt. Add penalties, late bank fees, credit cards, and car payments, insurance; you get the picture.
Bankruptcy is one answer, but leads to other problems. Credit becomes difficult to acquire for seven years for Chapter 7, and anytime during repayment of Chapter 13. Bankruptcies reached 1.5 million nationwide by the end of 2009, says the American Bankruptcy Institute. ‘”Next year’s bankruptcy numbers will probably be close to this year’s,” said Dr. Bernard Weinstein, professor of business economics, Cox School of Business at Southern Methodist University in Dallas.” Today, the best way to get out of debt quickly is a program called, debt settlement. However, it’s not without its drawbacks. There are two things to worry about. First, is cost. Companies charge 10-15% of the debt up front. This can turn your financial situation from bad to worse.
The second is the damage done to your credit report. “Debt settlement will show negatively on your report. But, is still better than bankruptcy, which makes a bigger dent in credibility”.
You’ll make one payment a month. You stop using credit cards, learn to budget and live within your means. The company gets penalties reduced/eliminated and lowers interest on everything outstanding. They reduce home loan interest; payments go down, while in repayment mode. In most states (except Texas) there is no collection agency harassment while making payments. You talk only to the debt settlement company, having the experience and carrot for creditors. The idea is that some money is better than none. Within a few years, debt is reduced significantly through effective negotiation and distribution.