Debt settlement is one of the methods used by consumers when they fall behind on their unsecured debt obligations. A debt settlement company may be able to reduce the consumer’s outstanding balances by up to 50%. The consumer may be asking why use a debt settlement company instead of trying to negotiate with the lenders themselves. As a consumer you can take this approach, however one of the drawbacks is you will be working with multiple lenders. These lenders would want the agreed amount money upfront in order to settle your account. In addition you may not be working with the same individual each time you contact the lender.

The consumer will now be making only one monthly payment instead of multiple payments over a set period of time. It may take between 12 to 48 months to complete the cycle of reducing the consumer’s unsecured debt. The consumer needs to know that if there financial situation improves they can opt out of the program and start paying their own bills.

By using a debt settlement program, they will negotiate on your behalf and notice the lenders of your indications of using a settlement program. The debt settlement program will set up a “trust/escrow account” for the consumer. Each month the consumer is deposit an agreed to amount in order to start saving. Once the account has reach at least half of the lowest outstanding balance of one your credit cards, the company will begin negotiations with the lender.

So call today and speak with a consultant to learn more about Debt Settlement!

The consumer needs to step off the financial and emotional treadmill they have built for themselves. The consumer need to investigate the solutions that are currently available for them and their particular financial situation. There are several ways to approach the problem.

The most common methods are:
• Bankruptcy – This is the most serious of solutions to your problems. Please consult an attorney.
• Debt consolidation – This is applying for a loan to paid unsecured debts. However you maybe declined for a loan because you are a high risk with too much credit.
• Home equity loan – This is 2nd mortgage against your home if you have any equity in the property. This is normally an interest only loan with the rate floating at prime rate plus some percentage above prime.
• Debt management/debt counseling – Basically, this program works to get the interest rate lower but the balance is not reduced. These type of programs are reflected on your credit report.
• Debt settlement – A third party works on your behalf to negotiate with your lenders to cut your balance from 40 to 50%.
• Do nothing – This is not a good way to fix the problem.

Why select debt settlement? According to debt expert Gerri Detweiler, author of “The Ultimate Credit Handbook”, “It’s a little-know fact that when you fall further and further behind on your payments, creditors would much rather agree to settle your debts than have you file bankruptcy and not get paid at all.”

If you select debt settlement, you will need to understand all the steps involved in the process. This is not an overnight solution for the consumer. However, it is a method to reclaim your finances and relieve yourselves from the pressure of the mounting debt burden.

So call an expert today to find a solid solution for your problem.

Debt settlement is a way to approach your outstanding unsecured credit card debt. The debt settlement company is a third party company who on your behalf will negotiate with your various lenders. However, as a consumer you need to know the steps involved in this process and if it is the solution for you and your family.

Here are a few of the steps of that process:

• Consumer starts making a set dollar amount each month into a “trust account”
• When this account reaches approximately half of the outstanding balance of your lowest balance debt ( owe $4,000 and $2,000 in account)
• Debt settlement company starts to negotiate with lender
• This process is repeat until all of your debts are settled
• Establish a financial budget for the future

You need to be aware of all the steps involve in this process. You must
ask the questions of your debt settlement company and understand their answers. You need to be clear on what the steps are and how this process will affect you and your family during this financial crisis. One example is how this will affect your credit score. However, remember it may already be effect because of high balances, late payments and too much credit. You need to have established a step by step process in order to be successful in getting out of debt.

So, having said the above – debt settlement is an alternative to the other options available to the consumer. If the following options like debt consolidation, debt counseling or bankruptcy do not appear to be the right approach for you. Consider a good debt settlement company as a way out of your current financial situation.

The consumer needs to realize there are two types of credit available to them. Secured credit means debt has some type of collateral backing – your home, your car or in some cases, cash secured loans. The other form of credit is unsecured which is normally credit cards from lenders or retailers.

The unsecured credit is where the consumer has caused the majority of their financial problems. The consumer has used credit card to purchase daily expenses, like their groceries, gas, airline tickets, and on-line retail shopping. The credit card companies would offer points to the consumer to purchase items and give them reward points or points toward travel.

So the consumer continued using their unsecured credit cards and making only the monthly minimum payment. This monthly minimum payment was approximately 2 to 3 percent of the monthly outstanding balance. As a consumer, some months we would paid the minimum or include additional monies. This process finally has caught up with the consumers because they can’t afford even the minimum monthly payments in today’s economic climate.

The one way to get out of debt is to look for a debt settlement company. Debt settlement may not be for everyone. It requires the consumer to start saving money monthly until enough monies are available on the lowest outstanding balance credit card before the debt settlement company to begin negotiations.
Yes, there are drawbacks to this approach as there is to other options.

The first step is to discuss with a debt settlement company the ways in which they may be able to assist you out of debt. This is not an overnight fix it may take anywhere from 12 to 48 months. But if the consumer is really wanting to do something and get out of this financial hardship, call us today to discuss your options.

The debt settlement company negotiates on the borrowers’ behalf with creditors to reduce the overall debts in exchanged for an agreement upon regular payments. The debt settlement companies typically have relationships during their normal business practices with the credit card companies and can come to a settlement agreement quickly.

The process of Debt Settlement can be completed in a matter of months, depending on your ability to pay the reduced settlement balances to your creditors. You see, debt settlement consist of long term payment agreements which can last from 12 -48 months. If you are considering a Chapter 13 Bankruptcy that involves a long term repayment schedule from 5-7 years.

Making the decision to commit to a debt settlement program can be difficult but the majority of individuals who choose debt settlement find that they feel a great sense of relief once the process begins and an even greater sense of relief once their credit cards have been paid in full. If your anxious to put your debt behind you sooner rather than later, you’ll be pleased with your decision to choose debt settlement to resolve your current financial situation.

Debt consolidation is described as taking out a loan to pay off other unsecured financial obligations. However, a consolidation loan normally involves securing this new loan against an asset which serves as collateral for this obligation. When the economic climate was better, a consumer would go to their bank and apply for a home equity loan as a method of consolidating debt. A home equity loan was cheaper than the combined interest rates on the consumers outstanding unsecured credit card debt. But this does not solve the problem for the consumer, since they only added new debt to their current situation and repeating the cycle of using their credit cards.

So in today, economic environment, the consumer’s primary asset is their home. The majority of banks in today’s market are not lending unsecured monies to consumers for consolidation loans with some type of collateral. The equity positions in the home’s are not holding their value.

A debt settlement program, is a process to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. The process involves you putting aside a certain amount of money each month to accumulate monies for the negotiations to begin on your behalf. By using a debt settlement program, in some cases the outstanding debt by can be reduced by more than 50%.

You are reducing debt not adding more debt using a debt settlement company. Debt settlement when compared to debt consolidation is a better option. Because as a consumer you are taking charge of your repayment plan.

If you take a step back in time to the 1940′s or 1950′s and talk to your grandparents , they will tell you that cash was the most important item for a family. When they wanted to purchase a home for example they would save until they had almost half of the purchase price for the home. Yes, the cost of a home in the 1940′s and 1950′s was much less than today’s world. However, it shows that people would save their money. In fact , it was not until December 1947, that the banking system issued its first prime rate figure. Prime rate is the interest rate charged by banks to their most creditworthy customers. The first prime rate was established at 1.75%. Prime rate is the base rate that bank use and then normally add to that number when lending money to customers. On December 19,1980, the highest prime rate was 21.50% while today’s prime rate is 3.25%.

In addition most people would save cash for their purchases. The credit card was not in our vocabulary.. In 1950, the first nationwide credit card company was started by The Diner’s Club. The concept was that this was credit and the balance would be paid in full at the end of each month. In 1966, the general purpose credit card was issued by Bank of America. This became the for runner of the nationwide general purpose credit card industry. This card was used in place of cash and if we were short each month of paying off the balance that was alright with the credit card companies. So that how the cycle of personal unsecured borrowing started and got us into this financial situation.

Did you know the following facts:
• Average credit card debt is more than $8,000
• Average American Family has 8 credit cards.
• Of the 144 million general purpose credit cards only 55 million pay off their bill each month.
• 35 million pay only the minimum payment each month

You can get out of debt by starting to save with a debt settlement company. Now is the time to cut up the credit credits and balance our personal financial situation.

Henry Ford’s quote is right because every situation, we face needs to be viewed in small pieces.

We need to break down what our credit score means and how it is used when measuring the creditworthiness of the consumer. You need to understand what credit scoring is and how it is used by lenders before considering debt settlement as a way out of your current financial situation.

• Do you monitor your score on either a monthly or quarterly basis?
• Did you know that your credit score changes every month?
• Did you know that income is not considered by the major credit bureaus when calculating a credit score?
• The lower your credit score, lenders may deny credit and charge higher interest rates
• The credit score range can be from300 to 850
The credit score is a mathematical figure which takes into account, the following factors but not limited to :
• Number of accounts, either secured or unsecured
• Length of credit history
• Credit Limit
• Highest Balance
• Payment History
• Usage
One of the first question always asked is will debt settlement affect my credit score? Yes, in the beginning as your accounts start to go delinquent your credit score will drop. However, once we start settling up your accounts and your debt ratio starts to improve, you will notice your credit score starting to go back up. Again, you should be aware that your credit score will change monthly whether you are in a debt settlement program or not.

A bankruptcy will be shown on your credit report for 10 year and will continue to bring down your credit score. By using a debt settlement program, you will be able to start reducing your credit balances and will be showing lenders your willingness to pay your obligations.

As you paid off your debt, your credit score will start to improve and allow you to move forward.

This information is of general interest and not legal advice. If you need legal advice seek the services of a professional or attorney.

Debt Collectors Exploit Your Fear

The biggest tactic used in getting past due money is wage garnishment and seizure of property. This method is based completely on exploiting your fear. The collection agencies usually fail to point out that they need to go to court first to be able to do anything to you. It is possible for a creditor to take you to court and obtain a judgment against you allowing them to garnish your wages and possibly put liens against your home. While this could happen, the chances are small that they would go this far. It is too much time and expense to try and collect from you in this way.
Take It Slowly and Get the Debt Validated My sense is that most of us jump too quickly with the collection agency in paying the debt that they are calling about. I can only imagine how much money has been paid unnecessarily out of reacting to fear. What’s not to believe when it comes to hearing from the collection agent’s threats of impending doom and gloom if payment isn’t made immediately?
Hold on however. If you get a call, take a breath, you have options. The first thing you need to do is debt validation. Make sure that it is a valid claim and that it belongs to you. Given my years of experience in the mortgage and debt settlement businesses, I have seen thousands of mistakes on credit reports and have concluded that the credit reporting system in the US is flawed. Ask for the debt to be confirmed in writing and ask for copies of where you signed the contract or agreement that caused the debt.

Check the Statute Of Limitations For Your Debt

You may also want to check the statute of limitations for your State. There are limits to how long debt against you can be collected. Contact the attorney general in your state for this information. My recommendation is to call them. If the debt has been on your credit report for over 7 years (in most cases), the derogatory and the collection related to it should disappear from your credit report. If the debt has not been paid for 7 years, then it can no longer legally be on your credit report. You can challenge the item and it will come off. If the debt is removed from your credit and the statute of limitation is up on this debt, you should be in the clear. Bankruptcies can remain on your credit report for no more than 10 years.