Debt Settlement

Most people do not start out in life with the intention of getting deeply in debt. Although careless spending is certainly one reason for the staggering personal debt problem in this country, more people than not are in debt due to circumstances that they could not foresee. Perhaps the main breadwinner of a family lost a good-paying job, a family member become seriously ill or a divorce in the family caused overwhelming financial problems. If you find yourself stressed over being in debt, regardless of the reason, you should know that many resources are available to help you get your financial footing back, including debt settlement.

What Is Debt Settlement?

This process, also referred to as loan forgiveness, helps people get out of debt faster by getting creditors to legally accept less than what is owed to them. The way debt settlement works is when a creditor agrees to accept a lesser payment on your account to consider it closed and paid in full. Creditors are often willing to accept an arrangement if your account is severely past due or if you can provide an adequate explanation of how you ended up in your present circumstances. You may approach each creditor yourself, or you may contact a credit counseling firm to do it for you. With the latter option, you have the benefit of having skilled negotiators working for you and are less apt to be intimidated by angry creditors who want their money.

The Debt Management Plan

Entering a debt management plan (DMP) requires the assistance of an outside third party, typically a consumer credit counseling agency. To begin participation in a DMP, you first meet with a counselor to go over your debt, income and living expenses. Together, you will decide on a reasonable figure that you can commit toward debt repayment every month. The counselor contacts each of your creditors to obtain their permission to be included in the DMP. If they agree to participate, they will receive payment directly from the agency each month instead of from you. The agency you work with will inform you as to how to get your monthly payment to them.

Is Debt Settlement For You?

Debt Consolidation Loan

This method of settling your debt involves taking out another loan, which may be difficult to qualify for if you already have bad credit. If you own a home or have other valuable collateral, qualification will be easier to obtain. After you have been approved to receive a debt consolidation loan, you are free to pay off your creditors as you see fit.

There are several advantages to a debt consolidation loan, such as making only one monthly payment, the likelihood of lower interest rates and a tax deduction if you used your home as collateral. However, this method will only get you out of debt if you commit to not making any new purchases on credit and focusing solely on paying off your debt consolidation loan.

Choosing What is Right for You

As you can see, there are several good options to help people get out of debt that don’t include filing bankruptcy. To determine which one is right for you, locate a non-profit financial counseling center in your area and schedule an appointment with a certified counselor. He or she will go over your options and help you to reach the best decision possible, whether that is debt settlement or not.

Weighing Debt Settlement vs. Bankruptcy in a Troubled Economy

Advertisements make everything look interesting, don’t they? Chances are good that you’ve seen a few ads for debt settlement. Don’t worry, you’re in good company with a lot of people. Plenty of consumers are waking up and looking carefully at the issues surrounding debt elimination. So debt settlement becomes interesting. However, is it better than bankruptcy? That’s what we’re going to find out in this guide.

It’s time to consider just every factor and feature when it comes to your credit repair program of choice. While many people do well with debt settlement, you have to understand that it can take more time than bankruptcy. It’s also unregulated, which means that it’s up to you to work out the negotiations. On the other hand, bankruptcy is tightly controlled, with laws that protect you while barring creditors from taking you to court again. That would be like adding insult to injury. Your creditors have to agree to the debt settlement plan — and some won’t. The ones that don’t agree will have the legal right to attack you later in court. So it’s really important that you get a skilled negotiator that can work things in your favor. This might cost a lot of money that would be added to the overall amount that you have to pay. As a side note, you have to make sure that you pay back all of that money. Otherwise you’ll be in even worse trouble!

Individual Voluntary Arrangement Experts

Not everyone is a skilled negotiator on their own. If you’re a timid little church mouse type of a person (hey, we’re shy in our own way, so no judgment here), you’ll have to get someone else that can help you. There are indeed some debt settlement companies that you can turn to. They will do everything they can to negotiate well for you. If that’s too expensive, there are some nonprofit organizations in your area. Check those out as well.

When it comes to bankruptcy, remember that creditors get very little say in your bankruptcy. If the debts are unsecured (no collateral of any kind), then they have to accept them. If you qualify for bankruptcy, that’s your true escape plan.

Both debt settlement and bankruptcy have credit implications. You will not be able to just run out and get new credit cards. The secret? You really won’t want to. This is a time where you need to practice smart money management. This is a time where you need to consider what you’re really working with.

At the end of the day, you’re going to have to make the choices that are going to push your life forward — nothing more, and nothing less than that. You should think only about the type of life you really want — and then everything you can to make it happen. It’s easy to think negatively — and much harder to think positively!

You have all of the power in the world to change your life. Nobody can take that away from you. Never forget where you come from or that you’re still a person of great value.

Do It Yourself Debt Settlement

Is there the possibility of a do it yourself debt settlement? Today, more and more people have learned that in some cases, a lender will accept a debt settlement instead of waiting on the consumer to pay the debt off. While this is not always the case, it is often something that can be considered. But, when you consider a do it yourself debt settlement, there is much more to be learned that just the basics here.

To do it yourself, debt settlement should be taken very seriously. First off, if you head in to the lender and say you are paying them so much money to close the account, they will likely be offended and will refuse. Remember that it is you that is not able to hold up your end of the deal. Therefore, they are under no obligation to do what you want them to do. You need to approach them correctly, handle the matter in the right way as well as get paperwork to back up your needs.

Do it yourself debt settlement can happen, if you play your cards right. It should be noted that there is no way to guarantee that they will accept your proposal. Here are some things to keep in mind.

•    Approach your lender honestly. Make sure you tell them what position you are in up front. You are considering bankruptcy because your bills are too much right now (perhaps you lost your job or had a medical emergency.) Tell them that you are unable to meet your obligations but that you are looking for a method of paying it off and getting it taken care of so you can avoid bankruptcy.

 •    Tell them that you are talking to them first, of all your lenders. Tell them honestly that you will not be able to pay down all of your lenders.

 •    Ask them how much they can settle the payment for. Offer them less than that, but try not to insult them. Perhaps if they are offering to settle the debt at $500 and you only have $400 they will do it.

•    Realize that they do not have to do so. Also, take note that they are unlikely to settle for less than what you have charged onto the credit card or debt.

 •    Get everything in writing before you make a payment. Have them fax or email it to you so that you have the necessary information should someone question it later.

Working with a debt settlement company is always another choice. Of course, a do it yourself debt settlement is going to cost you less but it is going to be harder to get too. Do it yourself debt settlement can and does happen, as long as you approach your lenders in the right manner.

Budgeting Strategies That Work!

Contrary to popular belief, its money, not love, that makes the world go around. Sometimes budgeting can be off-putting as it deprives people of the things they want most, but without budgeting, there would be many things we wouldn’t have in the first place.

Budgeting is a great way to find out how much cash you have, and although difficult, budget management is a great skill to have. From setting aside a small portion of your wage each month, to paying bills on time, having a budget and sticking to it can do wonders for your finances as well as your lifestyle.

Make Sure You Keep Up To Date Records

List all of your essential expenditures such as food and bills, and try keep your direct debts to a minimum. Make more emphasis on recording the smaller expenditures however, as these are the holes in your pocket that can get you into trouble. From haircuts to trips to the cinema, continuous expenditures will destroy your budget – they may seem trivial, but every penny counts. Keep all receipts, and go through your statement with a fine tooth comb at the end of each month. By reducing all the little debts, you’ll find that your budget will be much easier to manage!

Shop Around

Don’t just buy the first product you see! From car insurance to travel money, comparison sites are able to offer a variety of comparisons on thousands of products, getting you the best deal. Having a little money left over at the end of the month is a great feeling, and it also shows that shopping around for the best deals is the best way to stick to your budget.

Spend Less Than You Earn

This may seem an obvious solution, but all the efforts you put into living on a budget will be worthless if you spend more money than you earn, and it’s a sure way to get into debt. If your income and expenditure is near enough the same, it means you’re parting with too much cash too easily. Reduce your outgoings by comparing prices on your major expenditures like phone bills and insurance. Saving a few pounds here and there might not sound like you’re looking after your budget, but unless you want to work a second job to cover your overspending, you’ll keep your expenditure to a minimum.

Prepare Your Own Meals!

Eating out instead of cooking your own food will really mess up your budget. As well as expanding your cooking knowledge, you’ll be able to look after your body by buying wholesome and healthy food. By breaking down the cost of a meal in a restaurant, you’ll find that the money you’ve spent could actually feed you for a week if you prepared your own meals!

Overestimate and Prepare

When allocating money for expenditure, it’s best to overestimate. This is because many expenses have variable costs and fluctuating prices which could eat into your budget. Instead of putting aside £40 for food shopping, try £50 so you’ve got something to fall back on. One of the biggest parts of budgeting is preparing for unpredictably, so if you’re smart with your cash, you’ll be able to keep within your limits instead of dipping into savings.

Post written by Tony, a personal finance blogger based in the UK for SO Switch.

Debt Settlement Tips

If you are currently “in over your head”, you may want to consider credit card debt settlement. It can help reduce your debt to a manageable level and save you from bankruptcy.

Before we continue, there are a few things you should know:

-We are talking about settling credit card debts only. This information doesn’t apply to other types of debts such as auto loans.

-You can hire a service to settle your debts, or you can try to do it on your own. It’s never guaranteed that a creditor will agree to a settlement, regardless of whether it comes from you or from a professional settlement company, but generally speaking creditors tend to be more cooperative with debt settlement companies than with individuals. If you want to go with a professional service, I recommend Curadebt.

-Please be advised that debt settlement should be a last resort; you should only use it when your only other alternative is bankruptcy.

-Credit card debt settlement can frequently reduce your debt by 30-70%, but it is not a “get out of jail free card”; you will likely have to pay income tax on any forgiven debt, and your credit score will also be adversely affected (although a settled debt is much better than a bankruptcy).

Now that we have all that out of the way, here is how to settle debts on your own.
First things first: do not attempt to negotiate a debt settlement with anyone other than your original creditor. If your account has been referred to a third-party collection agency, do NOT have any dealings with them.

In that case, contact the credit card company and inform them that you have fallen on hard times and may be forced to file for bankruptcy if you can’t find a way to reduce the amounts you owe. This should cause them to sit up and take notice, because chances are they would rather settle with you and get some of their money back, rather than let you file bankruptcy, which would probably leave them with nothing.

Bear in mind that in most cases, your account must be seriously past due before the creditor will be willing to consider settling. If you’re currently making payments on the account, you will need to stop before you approach the creditor about a settlement. Many credit card companies won’t settle until an account is approaching 180 days past due, at which point they will often “charge off” your debt and sell it to a junk debt buyer, usually for just pennies on the dollar. Clearly, it would be in the creditor’s best interest to settle with you because even if they reduce your debt by a significant percentage, they will still make more money than they would by selling your unpaid debt to a third party.

Once the negotiation process begins, proceed carefully. You should send all correspondence via certified mail with a return receipt, and be sure to keep copies of everything. If you speak to anyone over the phone, document the date, time, and name of the person to whom you speak.

Be patient and expect the process to take time; it can take anywhere from 3 to 9 months to reach an agreement on a debt settlement.

Once a mutually acceptable settlement amount is agreed upon, insist that you receive a copy of the agreement in writing before you make a payment. Be sure to ask the creditor to state in writing that they will never sell your forgiven debt to another party. This is important, because if they do that, you will then have a junk debt buyer harassing you for the remainder of the balance on that account.

Remember, if you don’t want to settle your debts on your own, or if you try but don’t get anywhere, you can always hire a debt settlement service. I personally recommend Curadebt because I know them to be ethical. If you decide to go with any other company, be careful who you choose. There are a lot of scams out there so don’t commit to any settlement service without researching them thoroughly first.

Credit Card Debt Assistance Achieved Through Debt Settlement

One of the things people need to sit down and really explore when they start to consider credit card debt assistance is what would be the most sensible solution to the debt trouble? For many, this is a tough question to answer while the phone rings off the hook and credit collectors are making nasty threats about ruinning your credit.

In many cases, the debt trouble arises through mismanagement of credit card debt. If this is the leading contributor to debt trouble, then seeking credit card debt assistance can achieve the same as something way more serious, like Chapter 7 bankruptcy. Whereas credit card debt assistance will work on fixing the credit card problem, Chapter 7 bankrupty eliminates all credit problems… and then some. Thing of Chapter 7 as using an nuclear weapon to get ride of an ant problem.

Of course, credit card debt assistance does not take care of an ant problem. This types of credit problems are much more than a nagging nuissance for most, and as such people struggling with such problems will likely take a more serious approach as well. This is where self-negotiated debt settlement and professional debt settlement programs fit in nicely.

While debt settlement has the effect of cleaning up some credit debt problems by reducing the principal balance owing by up to 65%, the remaining balance will get written off. While this will haunt the borrower or credit seeker for years to come, the end-result is much kinder than Chapter 7 bankruptcy, which scars all credit for a duration of up to 10 years.

Ultimately, even though debt settlement as a credit card debt assistance solution will have an adverse impact on mid- to long-term borrowing requirements, it is much easier to explain a settlement situation than it is to explain the bankruptcy. In many cases if there has been sufficient time between the date of settlement and the time that credit is being applied for, the lender may simply ask for evidence that the applicant’s portion of the debt was indeed repaid. This type of letter will come from the creditor who agreed to the settlement and is something that should be kept safe and in original format by the person who needed the credit card debt assistance in the first place.

As a debt management tactic, debt settlement is more than just credit card debt assistance. It provides the right amount of relief when it is need and it addresses the root of the problem (credit card debt) and not the general problem (credit as a whole). For many, it treats an isolated problem and while the after-effects might linger, these effects can be easily dealt with.