The Effects of Debt Settlement

Our current economy isn’t exactly great.  Unemployment is high; the housing market is stagnant as well as suffering a foreclosure storm.  President Obama says things are improving, yet no two economists can agree on the topic.  Because of all of this many Americans are finding themselves slowly being consumed by debt.  Debt settlement can be extremely beneficial for people over their heads in debt, though the effects in can have can be negative as well as positive.  However, pretending that the problem doesn’t exist out of embarrassment or a denial of the truth is even more harmful.

What is debt settlement?  It is when negotiations are made between the lender and the borrower (or an agency on the borrower’s behalf) wherein creditors reduce the overall debt in exchange for an agreement than regular lower payments will be made.  This only works with credit card debt.  Auto loans, student loans, and mortgages do not qualify.

The benefits to the debtor are obvious, and there are benefits to the creditor as well.    For the debtor, a huge portion of their debt is erased, usually between 40 and 50 percent.  They get to avoid a bankruptcy and all the legal complications and negative ramifications that go along with it.  One of the simplest effects it can have for the better is removing the daily stress of an overwhelming debt.  Not having to worry how to keep up with payments, which payments to make if you can’t make them all.  No more bill collectors calling several times a day, talking down to them, yelling at them, or sending threatening letter.  Plus, after all is said and done they are out from under their debt and free to move forward.  For the creditors, they get to collect at least part of the debt instead of just writing it off as a bad debt.  Plus they are likely to get more of their money back this way that they are through a bankruptcy.

The negative effects however, do exist.  The debtor’s credit rating is going to take a hit due to their payment history.  Once the debt settlement process begins, the debtor in most cases ceases to make payment.  This lack of payments damages your credit, and the credit report will list the debt as having been settled as opposed to paid.  This usually affects your credit for 7 years or so, but it looks better than a bankruptcy.

Anyway you look at it; the benefits of debt settlement outweigh the detriments, and will go a long way towards getting the debtor out from under his debt, and back in control of his finances.

 

Learn about debt settlement, debt consolidation, debt relief, and more at Impact Debt Settlement

Choosing a Reliable Debt Settlement Company

As our county’s economy continues to decide its next move, debt settlement is being utilized more and more as a way to get out from under credit card debt.  One the most important parts of this is choosing the right debt settlement company to represent you.  There are many to choose from, and not all are reputable; so you’ll want to consider carefully before you choose.  Listed here are some things you’ll want to consider.

Ignore the sales talk and look at the facts.
Because there are so many debt settlement companies, there is a lot of marketing hype.  The old saying that if something sounds too good to be true it probably is applies.  Read or listen carefully and ask questions.

Beware upfront fees.
If they are asking for all fees upfront, look elsewhere.  You’ll want to find a debt settlement company that asks for payment on a monthly basis.  You’ll also want to avoid maintenance fees.  This may take a little more time, but its worth it.

Beware high percentage fees.
The norm in the debt settlement industry is going to be between 10 to 20 percent of your debt.  If they are charging more than this, keep looking because you can find a better offer.  As with anything, shopping around can get you great results.  It will be good if you shop around for the best debt settlement rates by comparing various offers.

Look for accreditation.
You’ll want to choose a debt settlement company that is accredited by a reputable trust worth industry watchdog organization.  Below are two.

USOBA – United States Organization of Bankruptcy Alternatives – The USOBA is dedicated to advocating for fair legislation that will help provide consumers with a high level of protection.  As each state considers or introduces legislation, the USOBA participates by actively educating and cooperating with state officials, regulator, and legislators.

NADRC – The National Association of Debt Relief Companies (NADRC) was created so that the consumer can make an educated decision when choosing a debt settlement company. NADRC certified debt settlement companies prominently display our member’s logo, which links directly to our Consumer Bill of Rights page. Visit the NADRC Members page to verify that the company you are working with is truly committed to helping you become free of debt.

Read testimonials and feedback.
Most companies will have testimonials on their websites.  Read them.  If they leave you in doubt ask if there is a way to communicate with a prior client.  There are also sites that can put you in touch with people have gone though debt settlement and can share their experiences with you

Educate yourself.
The best way to choose a debt settlement company is to have as much information as you can in the onset.  Read, ask questions and don’t hesitate to keep looking if you aren’t happy with what the debt settlement company is offering.

Learn about debt settlement, debt consolidation, debt relief, and more at Impact Debt Settlement

Scare Tactics Debt Collectors Use

The main purpose of debt collectors is to frighten their targets.  Credit card companies use collectors who are pros at intimidation and the average person stands little chance against their ruthless assault.  These collectors usually employ psychological attacks on debtors, forcing many into paying off bills before they tend to the staples of life such as food and shelter.  Most collectors work for a commission so their main goal is to get a payment from the debtor, thus making themselves money.  They will lie, trick, con, and manipulate in an effort to frighten a payment from you.

Some of the more common tactics and common things they will tell the debtor in an effort to scare them.

Calling you several times a day.
This is done to harass you, as if you didn’t know you owed money.  All they are doing is trying to wear you down.

Sending official looking documents in the mail pretending to be attorneys.
Getting several different kinds of collection letters is common.  Som of them are going to threaten lawsuits but be sure to read the small print.  You’ll find that many say your case has never even been looked at by an attorney.  These letters are sent out by bulk in the thousands are meant to frighten you.

They are turning your account over to collections.
This is part of the usual process and a delinquent account can be actively moving through more than one collection agency over a period of only a couple months.

They are going to “charge-off” your account.
All this means is that they are listing your account as delinquent for accounting reasons. It has no impact on the process what so ever.

They are going to garnish your wages.
They aren’t, not that easily.  Garnishments have to go through a time-consuming legal process and can only be ordered by a judge.

They are going to put a lien on your property.
Same thing.  Only a judge can order a lien, and there is a required legal process that takes time.

That you are in big trouble, that you should be ashamed.
Literally millions of American are in the exact same situation that you are.  Yet millions of Americans aren’t going to jail for it like they would have you believe.  It nothing to be ashamed of, and you aren’t a bad person.

They are trying to help you.
They aren’t.  They are trying to earn their commission.  Any concern they show or advice they offer you is not genuine.  Their job is to get you to make a payment, it is how they get paid.

We don’t negotiate with settlement agencies.

Every large creditor does settlements.  They tell you otherwise because they don’t get  paid if you pay off what you owe through other means.  Granted, credit card companies aren’t thrilled with debt settlement agencies because these agencies know exactly what can and cannot be done to settle the debt.  None the less, the creditors will work with them.

Debt collectors will say just about anything to scare a payment out of you.  Be prepared to be threatened, spoke rudely to, and yelled at.  But also know what you can do to settle your debt.  Knowledge is your best defense.

Learn about debt settlement, debt consolidation, debt relief, and more at Impact Debt Settlement

Debt Settlement: A Solution to Control Credit Card Debt

America’s economy is enduring a great deal of stress right now.  The housing market is suffering a foreclosure meltdown, unemployment is a huge issue, and the economy in general is pretty much stuck in the mud.  Millions of people are living paycheck to paycheck, burying themselves under even more debt just to stay ahead.  Except they aren’t staying ahead, they are falling behind; making payments on one credit card with another credit card.  Put simply, many Americans have amassed an enormous amount of unsecured debt.  Credit Card Debt is where most of this debt resonates.

Unfortunately, many Americans will never be able to pay off their unsecured debt because they are only making the minimum monthly payments. Making minimum monthly payments is a sure way to stay in debt for decades to come.  For example, if an individual only paid the minimum payments with $7,500 of unsecured debt at 18.75% interest on their credit card, it would take in excess of 20 years to pay this debt off due to compounded interest.

People with credit card debt can be put into a few different categories:

• Pay more than monthly minimum towards their total credit card debt – Usually these individuals are able to manage their debt.
• Pay only required minimum payments –   This can lead to being in debt virtually for decades. Paying the minimum amount due usually only covers the monthly interest and a service charge.  These individuals think they are managing their credit card debt, but they aren’t.  In reality they are creating more debt because the compounding of interest applied by the credit card companies creates additional debt on a monthly basis. Even if an individual didn’t use their credit card during the previous month the amount of total debt would marginally decrease with each monthly payment, if any at all.
• Struggling to make minimum payments – For these individuals the impact that debt settlement can have on their financial situation is dramatic.  If these individuals do not take action their credit card debt is going to affect every other element of their financial security. Debt settlement or bankruptcy may be the only solution that will provide them the relief. Debt settlement with professional help usually results in unsecured debt being reduced by 40% – 50%and interest from each of these liabilities will stop accruing.  This form of restructuring debt allows an individual to avoid the consequences of bankruptcy while gaining enough flexibility to pay down their debt over a set period of time, usually between 36- 60 months.

Before an individual’s unsecured debt becomes overwhelming it is important to search for a solution such as debt settlement, to avoid being stuck in a never ending cycle of debt liabilities.  This solution provides an individual an opportunity to only pay a fraction, usually only 40%-50% percent, of their total unsecured debt.  Debt Settlement companies deal with harassing creditors and assist individuals with paying off their debt so they can being to re-establish their financial freedom and rebuild their credit.

Learn about debt settlement, debt consolidation, debt relief, and more at Impact Debt Settlement

Debt Consolidation and Debt Settlement Facts

Debt Consolidation can provide a way for people to get their debt under control and take back control of their finances.  Millions of Americans have growing debt issues and credit cards are usually the cause for a large part of the problem.  Finding a way to pay this debt off is seemingly impossible for some.  Debt consolidation is often times the best option available to correct the problem, allowing people to pay off what they owe.

Debt consolidation allows you take loans with high interest rates and replace them with loans with a lower interest rate.  It often extends the repayment period as well.  The result is more of your payment going towards paying off the principle and less of it going towards the interest, allowing you to get your finances in order and take control of your debt back.

Where some people can go wrong is using this extra money to increase their debt.  This is a bad idea.  If you manage to cut your monthly payments in half, using the remaining half to just spend more isn’t going to help you reduce your debt.  You need to put at least part of it into reducing the principle, thus lowering the interest due and lowering your debt.  Another good idea is to save some of it, so that if an emergency comes along you’ll have a buffer and not have to go into debt to handle it.  Debt Consolidation is for people who want to change their spending habits and get out of debt.

There are many benefits of Debt Consolidation. When dealing with credit card debt, the amount owed soon surpasses the original principle because of high interest rates and fees for late payment.  A debt consolidation can erase the interest and fees, making it so you only pay back the initial amount borrowed.  Another benefit is all of your monthly payments are consolidated into one payment each month, allowing you to keep better track of what you owe.  The most important benefit is that you’ll be debt free sooner.

The impact a debt settlement can have on your current situation can be monumental.  Debt specialists negotiate with creditors on your behalf, working to reduce or entirely eliminate the outstanding interest on the debt.  There is usually a fee for using a debt consolidation professional. Caution should be exercised because there are companies out there that are less then reputable.  On the whole however, most provide quality services that achieve results.
Debt Consolidation can and will affect your credit rating, though the affect can be a positive one.  If up until now you’ve had good credit without many blemishes in your credit history, then debt consolidation may have a negative affect on your credit rating.  However, if you have accounts in default with late payments then debt consolidation will ultimately lead to an improved credit rating while eliminating your unsecured debt.

The sooner you take an active role in your debt, the sooner you can be debt free.

Learn about debt settlement, debt consolidation, debt relief, and more at Impact Debt Settlement.

 

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