Get Out Of Debt

Upon reviewing the different options at your disposal today, it should be quite evident which direction you should go as a consumer. The conventional wisdom tells us that all debts are created differently, so it will take a solution that is designed to your situation. Some people benefit from debt consolidation and the nice organization that it brings. These people need structure and they just need a new way to look at their current debt. Other people can get by with settlement, because they qualify and they have the resources to make it work. Reviewing the two should show you which one is a better choice for you.

Settlement and the amazing disappearing debt

If you want to see something of a magic trick, then utilize debt settlement. If you have never seen a debt disappear, then you owe it to yourself to start now. Debt settlement requires some things out of the consumer, though. First of all, you have to have either negotiation skills or a solid settlement firm to help with the negotiations. Likewise, you are going to need a lump sum up front in order to settle. If you don’t have that, then your options are to save up and get the lump sum or go another direction. Settlement can save you as much as 65% or 70% on your debt, though.

Consolidation and the counseling program

Debt consolidation might just be a new loan to some people, but it does not really come alone. For most good consolidation companies, it comes alongside a program that is designed to help you get ahead. These programs involve a type of credit counseling where you look at your debt with a person who is skilled in that regard. That person will help you come up with a way to avoid problems in the future. The more important item here is the cut in interest that you will receive as a result of this loan type. It can save you thousands of dollars over the long haul and consolidation requires no lump sum, either.

These two options are different, but equally effective in their own way. The debt relief world is nice because it has something to offer to everyone and this is an example of that. If you use each of these methods in their intended way, then good things can happen for your credit report and your debt ledger.

I have written in the past about programs that do not tell consumers the truth, hiding every little detail possible in order to cash in on retainer and monthly maintenance fees. First and foremost avoid most agencies with these unnecessary charges unless they come highly recommended from a reputable source.

What is the truth? Many of us do not want to hear our interest percentage rates will rise, late fees and penalties will continue to accumulate, etc.. when we stop making our monthly payments to our creditors, and there is no one that can make them go away except for consolidation programs that will negotiate to lower interest rates. When consolidating all payments must be made on time otherwise we will be dropped from the program. In order to consolidate debt we must be current on all payments. Settlement programs can not stop these charges at all, and that is the truth.

So now we now if we consolidate we will be paying everything we owe back to our creditors plus interest. What most consolidation companies fail to tell consumers is that for as long as they are in the consolidation program their credit report will look as if they have filed for chapter 13 bankruptcy. This little detail is often not told by credit counselors. If credit score is important any type of debt relief program must be avoided.

The same goes for settlement programs, credit score will be affected as well. The only difference is the person’s credit report will not show a chapter 13 mark. The accounts will be reported as delinquent until settled or payed in full. Again, if credit score is important debt settlement is not the route to go either.

Are there any tax implications on debt settlements? YES. On any savings over $600.00 on any particular settlement a person will receive a 1099 statement and any money saved over $600.00 will have to be claimed as income unless the persons losses for one year are greater than the gains. Meaning if when tax time rolls around a person shows a negative margin on their earnings, for more information on this matter we should consult a licensed tax broker.

Can we be sued, have wages garnished, property attached to? YES. Any creditor has the right to the assert legal action to claim money owed. When we sign our contract agreement we give the credit company or companies the right to do so. If any debt relief agency tells anyone none of the above can happen, they are lying. Some individuals are very lucky, and never even get a phone call from a creditor or a collection agency and have the statue of limitations expire on their debt. I believe everyone must be aware of these possibilities before pursuing settlements on their debt.

So far we know of the fees that will be accumulated on our debt if we discontinue our payments to our creditors, what will happen to our credit reports and scores, the tax implications of debt settlements, the legal implications. Do we really need someone not telling us all this? If I were looking for debt relief help more specifically debt settlement I would like to hear all these little nasty details before deciding to negotiate on my debt. I would be able to sleep better at night knowing the consequences that may or may not happen.

Debt negotiation has yielded great savings to many, especially if they are well informed and the debt relief agency they choose to work with is honest and up front. Even with some of these difficulties waiting to happen some of us have no other choice but to seek debt relief, BE SMART and ask questions, if the answers you are getting do not satisfy you, keep searching. The right debt relief agency is out there for you, just look hard enough and you will find it.