Get Out Of Debt

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.

The American economy seems to be recovering, albeit on very wobbly legs. The housing market, however, is still in rough shape. Many American homeowners are unable to meet their debts, either because of adjustable rate mortgages that got ahead of them or because of recent job losses. Whatever the reasons for their struggle, many homeowners are now facing foreclosure and weighing all of their options. After a bit of research, many narrow down their decision to one of two choices–short sales or filing for bankruptcy. While neither is a particularly appealing option, homeowners will likely have to consider both and then decide on the lesser of two evils.

While foreclosure is a dirty word for many Americans, bankruptcy is usually thought of in even lower regards. It conjures up destroyed credit scores and financial futures. In actuality, bankruptcy is designed as a way for someone to get something of a fresh start financially. Essentially, it relieves a debtor of many of their debts, albeit with some fairly harsh penalties. Normally bankruptcy involves the total liquidation of a debtor’s assets. Any money made through the liquidation is divided amongst those that they owe money to, according to different factors. Bankruptcy will indeed decimate your credit score and make it almost impossible to receive any type of loan for quite some time, seven years in general.

Short sales are an alternative that many Americans have begun to utilize. Essentially they involve the sale of your property for a lower amount than you actually owe the lender for it. It may be hard to convince a bank to agree to these arrangements, but under certain circumstances they will. Your credit will still be negatively impacted, but not quite as dramatically as if you slipped into foreclosure or declared bankruptcy. There are certain tax implications that may make it more difficult to go with this option, although for many people it is a much more attractive course of action.

The sad truth is that there is no easy way to escape foreclosure. Whether you elect to filed for bankruptcy or attempt to get your lender to agree to a short sale, you’ll still face repercussions, especially in your credit score. No matter what path you take, the years ahead of you will be difficult. But a bit of research will help you decide on the right course of action. Consulting a professional may be a very wise idea, as the intricacies involved in any of your options are likely to be complex.