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Archive for the ‘Debt Settlement’ Category

Don’t Fall into these Debt Settlement Mistakes:

Saturday, May 15th, 2010

When you have already filed for debt settlement, that means that you had been under some financial burden and already need a way out of the pressure.

Unfortunately, there are some people who would still commit a lot of financial mistakes even while they are under a debt settlement program. These kinds of mistakes would further damage your financial situation and would really make it difficult for you to recover from your personal financial crisis.

It would be important then to know what the common debt settlement blunders are, and find ways to avoid them from happening to your life. Here are some examples of the common debt settlement mistakes

Still using your credit card while under debt settlement:

The thing with joining a debt settlement program is that you are doing it in order to reduce your debt. However, once you are in a program you are not actually required to stop activities that could increase your debt. That is why while the debt settlement company can lecture you or dissuade you from using your credit cards, they would not actually force you to stop using them.

Unfortunately, many people take advantage of this “freedom” and would still pile up their debts because of their liberal credit card use. As you can see, accumulating or even increasing your current credit card debt would run counter intuitive to your goal of being able to be free from the financial pressures.

Forgetting to check your progress:

Another common mistake that people make with regards to debt settlement is their failure to check their progress.  Sometimes they do not realize that they are not making enough payments to cover for the funds that the debt settlement company would use to handle the payments with your creditors.

This should not happen at all as checking your progress is as easy as visiting the financial institution’s website and looking at your records!

By knowing these mistakes, we hope that you would be able to avoid them and be on your way to financial recovery through debt settlement.

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Red Flags to watch out for in Debt Settlement Companies:

Thursday, May 13th, 2010

Because of the current economic crisis, there are plenty of people who have been searching for ways to get out of their financial burdens. The two most frequently used options are either filing for bankruptcy or getting into a debt settlement program.

While filing for bankruptcy is relatively straightforward (consult a bankruptcy lawyer, file in a court, and wait for results), debt settlement is not as easy as it seems. You would usually have to partner with a debt settlement company before you get into the program.

It is in the selection of debt settlement companies that make it difficult for people to really be helped by debt settlement. This is because there are a lot of companies that are not going to help you and instead would just take your money and put you into deeper debt.

Here are some red flags that you have to watch out for so you would be able to avoid these companies:

Having Very High Upfront Fees:

You should just avoid a debt settlement company if it has a very large upfront fee. This means you would have to pay a lot of money before having any debt settled. Think about it, In the event that you do not get your debt settled well, then you would just add an extra loss on your income because of the high fee.

A promise that it will have very little effect on your financial standing:

You should realize that a debt settlement would really affect your financial records. Promising that their program would get you away scot free is already a big red flag. Similarly, a promise that says you would be debt free in a very short time is also a cause for concern.

Of course there are companies which would help you by entering you into a credit recovery program, but this is usually done after a debt settlement which underscores the effects of using it to recover from your financial woes.

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Important terms to understand about Debt Settlement

Wednesday, May 12th, 2010


If you want to get into a debt settlement program, you would usually be interviewed first to see if you would meet their eligibility requirements. Throughout the course of your conversations, you should expect to encounter a dozen or so terms that you may not be familiar with.

While the credit counselors that you are talking with would usually be accommodating to explain the terms that you do not understand, it would still be better if you already have an idea about the terms that they are using.

Here are some important terms that you need to understand about debt settlement:

Charge-off

A charge off is when a debt is considered uncollectible already and is already stricken off by the bank from their records of active accounts.  They could either consider this as a bad debt, or sell it off to collections agencies.

This is what the banks are trying to avoid which is the reason why you would have some leverage when going for negotiations for debt settlement.

Debt to Income ratio:

The debt to income ratio is the percentage of your monthly expenses (including the payments to the debt settlement program) in relation to your monthly income.  This is usually used to determine your negotiations for debt settlement.

Delinquency:

Delinquency refers to your failure or inability to make the regular monthly payments to your debt on time.

Secured Debt:

A secured debt is when the creditor has some protection from loss because the debt is secured with a valuable property. This means that when a debt is not repaid, the creditor would have  a legal right to acquire the valuable property and sell it for payment.

Unsecured Debt:

An unsecured debt is a debt that is not secured with any valuable property. This is more risky for the lender as they do not have any protection once the debtor has lost his ability to pay.

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Check if your debt settlement company is legitimate:

Wednesday, May 5th, 2010

If you are under stress from a burden of a large debt, one of the ways that you would be able to get out of it would be through debt settlement. For debt settlement to work, you would need to go to a debt settlement company and they would be able to handle the necessary negotiations in order for your debt to become smaller.

Unfortunately, not all the debt settlement companies that you see offering their services to you are legitimate. There are some which are money making scams and are just out to get your hard earned money. There are also others who used to be good and respectable but have now been battered by plenty of complaints due to various circumstances.

That is why it would be important to check if the debt settlement company that you would like to partner with is actually legitimate and is fully capable of performing their duties.

A couple of checks that you could make would be:

Verify that the company is ok through the various agencies:
You could go to various agencies or government offices such as the state attorney general, consumer protection agencies, and even the better business bureau to check if there are any kinds of complaints that that are filed against them.

Aside from this you should also ensure that the company is actually licensed to work in the state where you are residing in.

Visit websites that have list of reputable dept settlement companies:

There are actually various websites that list the various debt settlement companies and tell you about which of them are reputable and legitimate such as tascite.org. You could check the site and see if your debt settlement company is part of it.

Of course, it does not mean that if your debt settlement company is not there that it would automatically indicate that they are not good or legitimate.

By being able to do these checks, you would be able to find a good debt settlement company that can truly help you get out of debt.

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Selecting a Good Debt Settlement Company

Thursday, April 29th, 2010


If you find yourself under tremendous pressure from your debts, you may want to look into the option of debt settlement. Debt settlement is a method wherein you would be able to ask your creditors to accept a lesser percentage or amount of your total debt as equivalent to full payment. This would be a great method for you to be able to ease the burden of your debts.

Of course, for this option to be successful for you, you would need to partner with a great debt settlement company. They would be able to give you the help that you need in order to be able to settle your debts properly.

Here are some factors for you to use when selecting a debt settlement company to help you:

Information Security:

Before partnering with a debt settlement company, it would be important to note whether they are using secure software to handle all your information. This is because all this data are very crucial and a leak would put you in great financial risk.

They should be able to guarantee that all the data that you would provide them, would be kept confidential and would not be leaked to other companies,

Expertise and good standing:

It would also be great if you would be able to find a company that has a good track record when handling consumer financial issues. You would need to find one who is very experienced in handling such cases to ensure that you get the best settlement deals with your creditors.

Having a company that has a proven capability to handle such negotiations would give you a better chance of having to pay a significantly lower percentage of the debt that you owe to your creditors. This is because they already know the strategies to employ and the techniques to utilize during the negotiation process.

Yes, being under debt can be truly stressful, but that does not mean that you should just grab on any debt settlement company that comes and offers their help. By using the factors above as guidelines, you would be able to determine whether they would be able to truly help you in your goal of debt settlement.

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Am I eligible for Debt Settlement?

Wednesday, April 28th, 2010

Since debt settlement is now one of the options for people who are suffering from the burdens of a large debt, many people would want to know some of the factors that would make them eligible for applying for such a program.

This is because the program is not necessarily open to everybody. There would be eligibility checks that you need to pass in order for you to be allowed to get into the program.

Here are two common factors that debt settlement companies use for you to know if you are debt eligible:

Amount of Unsecured Debt:

Before your debt is deemed eligible it should actually reach a certain amount first. Most companies would only allow debt settlement once your total unsecured debt reaches an amount of 10,000 US dollars.

You should first computer your total unsecured debt before approaching a debt settlement company so that you would not have to waste your time just to realize that you are not eligible to begin with.

Capability to Pay:

Of course, the debt settlement companies would also take into consideration your capability to pay. They would be able to check if you have the means to an income that would enable you to pay for the debt as well as the service in the amount of time that is specified in the negotiations.

After all, debt settlement means paying off a smaller debt at a longer amount of time. This means that the company would not go into a negotiation if it knows that you do not have the capability to do that.

Of course, these are merely some common factors that many debt settlement companies utilize to determine your eligibility for debt settlement. They may change according to some more negotiations with the company, so you may still want to contact them to talk about your case if you don’t pass the factors initially.

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What you can get from Debt Settlement Programs

Friday, April 23rd, 2010

One of the biggest boons for people who are suffering from the inability to pay their debts due to the current economic downturn are the debt settlement programs that are being offered by a variety of debt settlement companies.

These debt settlement programs help people who are in debt by negotiating with the companies that you have debts to. These negotiations would usually end up in an agreement where you would just need to pay a percentage of the unsecured debt and not the entire amount. Of course, this would come at a fee that you have to pay to the debt settlement company.

Aside from the main point of reduced debt, here are some of the additional benefits from debt settlement programs:

Reduction in creditor harassment:

One of the things that people in debt really hate is the harassing phone calls or visits that collection agents do. It makes people lose their peace of mind and become on edge as they are constantly reminded (sometimes rudely) of the debts that they have to pay.

After having some sort of negotiation through the debt settlement companies, you can expect that these kinds of calls would lessen giving you the peace of mind that you crave for.

Credit Counseling:

Some Debt settlement companies would even provide you with a credit counselor. Aside from handling your settlement needs, the credit counselor would also be the one who would give you the tips and information needed so that you would be able to learn more about your financial situation.

They are a great benefit as they could help in preventing you from repeating the mistakes that lead you to accrue a debt that was difficult to pay.

Of course, all of these benefits are dependent on the quality of the debt settlement company that you have partnered with. That’s why it would be important to find one that can really cater to your needs.

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Understanding the benefits of Debt Settlement Programs:

Thursday, April 22nd, 2010

Because of the economic difficulty that many people have faced during the past couple of years, many are finding hard to get the income necessary for paying off their unsecured debts. In fact, some have already fallen into vicious cycle of having to cash advance on one credit card just to be able to pay off another credit card and its interests. This form of debt cycle is seemingly endless for some and has chained them into a lifetime of having to pay their obligations.

One of the ways that one can utilize to break this cycle is through getting into a debt settlement program. A debt settlement program is generally a a way to lower your unsecured debts. It is offered by a debt settlement company and they go about it by negotiating with your creditors to accept a settlement amount, usually around 20 to 50 cents on a dollar, rather than paying the full amount.

Of course, it is not a magic pill that one can take to make their debts go away, to fully utilize debt settlement programs it would be better to understand how the benefits actually work. Some sticking points to the benefits of debt settlement that you would need to know include these things:

Yes you do save some money, but you would have to spend for it first:

Unless you are using a non-profit Debt settlement program, then you would most probably need to pay for the company that offers the debt settlement opportunity to you. Usually, the fee for the debt settlement program is a percentage of your debt plus an application fee.  Some companies, the ones that have no souls, also would charge a percentage of the savings due to their negotiation.  But usually, typical companies would charge around 20% of your original unsecured debt.

Our advice, make sure that everything is in writing including their fees and expectation from their service.  Also make sure that they will not sell your information somewhere else.  Lastly, make it a point to ask them what would they do to fix your credit back after you complete their program.

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Debt Settlement: an alternative solution to money issues

Friday, March 26th, 2010

When people are facing some serious crisis in paying off their debts, people would have two common ways to deal with it. Unfortunately, the two common ways are not very good or very helpful in solving the situation.

The first is that people would borrow money from another source in order to pay off a previous debt and its interests. They would do this in order to prolong their due dates and be able to stop the interest from growing. Sadly, this can turn into a vicious cycle wherein one would just end up getting other debts to pay off previous debts and they would not be able to escape from it.

The other would be to file for bankruptcy. While this is a common solution nowadays, especially with the large number of companies and people who have lost their income sources, it is not really very advisable for everyone. This is because there are long lasting effects to filing for bankruptcy and it may make it difficult for one to recover.

So if these two are not the ideal solutions for debt issues, what can one do? Well, they could try to get a debt settlement from their debtors in the hope that it would help them recover from their money issues.

What is Debt Settlement?

Debt settlement, as the name implies, is an agreement where in the debtor and the creditor would agree to a reduced the amount that would be considered as full payment for the debt.

Reasons behind Debt Settlement:

For the creditor, they would benefit from going this route because they would still be able to receive an amount to cover the initial money that they have lent out instead of risking that they would gain nothing if the debtor would file for bankruptcy.

The debtor would want the option for a debt settlement for 2 reasons. The first is obviously the fact that they would be able to pay a much more manageable sum than what was initially borrowed. The other reason is that debt settlements would not have as much long term effects that filing for bankruptcy would have.

How does one go about it?

To begin debt settlement, one would usually have to approach a debt settlement company. They would be the ones who would negotiate with your creditors to determine just how much you would be able to pay them.

Of course, the debt settlement company would be doing this for a fee. It is usually either a fixed amount that they have set out at the beginning, or a certain percentage of the money that you have saved because of the settlement.

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