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.

With sweeping changes in credit law, consumers find themselves scrambling for solutions. Should I get credit counseling? Should I declare bankruptcy? Can I declare bankruptcy? Where do I start? These are pressing questions facing many people today. In this brief article I will outline some steps to consider when developing your debt consolidation plan.

Debt consolidation is simply a step towards bringing your debt into a manageable state. The process as a whole may involve debt settlement, debt restructuring or more drastic measures like declaring bankruptcy. If you have concluded that the latter (bankruptcy) is your best course of action there is one important change in the law that you must comply with. New bankruptcy law requires that consumers seek ‘consumer counseling’ assistance prior to being eligible for bankruptcy. If the stress is mounting and financial doom looming I suggest you begin the counseling process right away.

Credit Counseling is a relatively painless process of evaluation and consultation. You will normally be able to reduce your debt payments by around 50% by allowing the credit counseling organization to represent you. This process will have an adverse effect on your credit but at this point it may not matter to you. If after you make an effort to utilize credit counseling and it proves to-little-to-late, bankruptcy becomes an available option.

As a credit specialist my recommendation would be to think long and hard before considering either credit counseling or bankruptcy. You can remedy most situations yourself with the right plan. Obtaining the right debt settlement software could help turn things around in as little as a few hours. A challenge I often see is caused by the chaotic state of mind that usually surrounds financial hardship. This dynamic may adversely affect your consistency. You know yourself. If you can dig in and fight for your financial solvency then you will save thousands of dollars and potentially save your credit rating. If you don’t have time, or the do-it-yourself road just isn’t for you, credit counseling or bankruptcy may be imminent…and that is ok. Hard times happen to good people.

In my opinion, the most important thing you can do to get ahead of this situation is take action. It is easy to avoid issues in hopes that they will just go away…it is human nature to do so. After all, who wants to speak to a rude collection agent or attorney after all? Unfortunately you will only be compounding the problems if you avoid them. Be brave. Either get a system for managing a debt consolidation campaign or contact a credit counselor for advice. Just because you talk to a counselor does not mean you are obligated in any way to use the service. As a matter of fact, I recommend taking advantage of their free expertise. I have reviewed and recommended both software and credit counselor’s for these endeavors. I have included a link below for your convenience.

Recovering from financial hardship is challenging but there is a light at the end of the tunnel. Remember the things that enrich your life. Your children, family, friendship, pets, good food and Mother Nature are reminders of what life is about. Take time out to enjoy yourself while taking equal steps toward solutions. Concentrate on the solutions and they will begin to manifest themselves in the form of growing security and peace-of-mind in your life.

Copyright December 2005, yourcreditcures.com, USA

Consumers struggling with a high debt burden are reminded that research is required before enrolling in any debt relief program. While there are hundreds of legitimate companies that can help individuals eliminate their debt, there are also plenty of scams circulating within the industry which should be avoided. Before enrolling in any program it is important to investigate the company and the process they claim to use to eliminate debt. Here we are going to take a closer look at a potential scam that has cost some consumers hundreds or even thousands of dollars.

What is the National Debt Relief Program Scam?

It appears many consumers have received a letter in the mail claiming to be from the National Debt Relief Program. Victims of this scam have stated the letter at first glance appears to be from a government agency. Upon closer inspection it becomes clear the letter is not from a government agency but rather GHS Solutions, a debt settlement company. Jennifer Wallis is a Consumer Credit Counseling Service employee in central Oklahoma. She has clients who have received this letter which states the National Debt Relief Program can “reduce monthly payments by up to 50 percent”. Why is this letter considered a scam? Since the letter is designed to look like correspondence from a government agency, many consumers fail to realize it is actually from a debt settlement company. The information is misleading and many consumers who are desperate for a solution to their debt problem may enroll in a program that can have serious negative consequences.

GHS Solutions is a debt settlement company based in Delray Beach, Florida. The Better Business Bureau has given the company a F rating and reports 102 consumer complaints in the past three years. Of the 102 total complaints against the company, 88 are about the company agreeing to perform according to their contract.

GHS Solutions is not the only debt settlement company linked to the National Debt Relief Program scam. It appears consumers have also complained about a company named National Debt Relief and the program they offer to consumers. In this instance consumers have actually enrolled in the program and claim the company did not perform as promised. Clients claim National Debt Relief failed to stop collection calls and did not begin negotiating debt immediately. Other complaints claim the company misrepresents itself to appear like a government agency which leads consumers to believe they are working with a government program designed to assist individuals facing financial hardships.

It is important for all consumers to understand what type of debt relief program they are committing to before moving forward. Debt settlement is a legal process where individuals or companies hired on their behalf, negotiate with creditors to reduce delinquent balances in order to eliminate debt. Anyone considering this process must thoroughly research both the method and any company they consider hiring. There are several risks involved in the process however it can be the best option for people facing a serious financial hardship who would otherwise have to look toward bankruptcy to address their debt situation. It is unfortunate that some debt settlement companies continue to mislead or misrepresent themselves in order to enroll clients in their programs. Consumers are urged to carefully read any correspondence as well as contracts prior to enrolling in a debt settlement program to avoid confusion and disappointment down the road.

As of the moment we are in the midst of a pretty bad economic recession. People have been losing their jobs, businesses have been going under, and we are hitting record numbers with home foreclosures. To top all of this off we are seeing American consumers hit a record high with credit card debt. Now what most people do not know is that getting out of debt is not all that hard if you take the right steps.

For starters most people do not know what options they have available to them in order to get out of debt, however before going into any of those options debtors must be made aware that pretty much anything they do to get out of debt will have a negative credit effect. Unless the debtor has the money to pay off the debt in full, which ninety nine percent of people do not. The number one priority when trying to get out of debt should be exactly that, getting out of debt, not worrying about keeping a great credit score. A credit score is something that changes like the wind and can be repaired at a later date, and besides when you’re in debt you should not be worrying about how to get yourself into more debt in the future.

With that being said there are two main debt relief programs available to people trying to get out of debt. There is consumer credit counseling and there is debt settlement. Both have their respective pros and cons.

A credit counseling program is one that boasts the benefits of reducing interest and consolidating payments into just one. So instead of making numerous payments throughout the month to your creditors you just make one to the credit counseling agency and they will pay the creditors for you. Plus the creditors will lower the interest on these types of plans. The problem is that for many people the payments will still simply be too much. Often times the payments are just as much if not more than what people are putting out on monthly minimum payments.

With credit counseling people can look to get rid of their debt within 5-7 years and look to pay back around 135% of what they currently owe. Another issue with credit counseling is the low success rate, because if just one payment is missed often times the creditors will kick the consumer off of the program, thus bumping the interest back up. And yes there is a negative effect on the credit, a credit counseling plan will be shown as a code 7 on the credit report which looks bad. But the bottom line is to get out of debt and with this plan money and time will be saved when compared to riding out the monthly minimum payment scheme for what could be decades.

Now there is another debt relief plan called debt settlement. The benefits of this program are the savings of money and time. Most debtors find themselves saving around fifty percent of what they owe today, and can realistically get out of debt in just a few years. The downside to this program is that in order to achieve a debt settlement the consumer must let the accounts fall into default, thus putting the creditors in a position to negotiate a settlement. So obviously this will have a negative effect on the credit score. However once the settlements start coming in the credit score will rebound and repair itself naturally.

Right now with the state of the economy debt settlement has been a very lucrative debt relief method for many people. The creditors have been negotiating very low settlements, much lower than they do when the economy is doing better. Many people are finding they are saving a tremendous amount of money with this option and find themselves getting out of debt very quickly.

Like I said in the title, getting out of debt is not all that hard. The vast majority of people would be able to manage one of these two types of programs. The only thing that holds most people back is the apprehension of their credit score being affected. This is quite a shame that the creditors have so many people kneeling at the alter of FICO, that they do not realize they are losing thousands of dollars to the credit card companies with no end in sight. With the way things have been going in the economy people are going to need all the money they can get and throwing away money to high monthly minimum payments may be the straw that breaks the camels back for millions of American families and puts them into very precarious financial situations.

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.