So what is the debt settlement option? Debt settlement is a method by which a third party negotiations on behalf of the consumer with their lenders to reduce their outstanding balances. Typically, this program works only for unsecured credit cards but may include any other types of unsecured debt like medical bills.

Today’s consumer is asking themselves, “How am I going to get out of debt?” The answer to that question is to consider a debt settlement program as a method to resolve their current financial situation. Consumers have not faced this type of financial climate since the Great Depression and in that situation; they were not overburden by unsecured credit card debt. Consumers are riding a roller coaster of emotions because of their financial situation. This along with the fact they are facing financial hardships because of a lost of job, reduced salary, divorce, death or medical emergency.

The consumer needs to select an experienced debt settlement company.  This company should be able to provide answers to all the consumer’s questions in a way that the consumer clearly understands how the program works.  The consumer should ask for the following:

• Upfront copy of all documents along with fee and cost schedules
• A company profile
• List of accreditations or afflictions, i.e., Better Business Bureau and associations

With any program, there are pros and cons when considering a course of action.  It is the consumers responsible to ask questions and do their research on the debt settlement company they select.

 The con’s are:

·         Tax ramifications – consumer will need to report any amount of forgiven debt that exceeds $600. This means an increase to your tax bill.

·         Credit score will drop

Some of the pro’s are:

• One single monthly payment
• Avoiding bankruptcy as an option. Always consult with an attorney about this step.
• Stopping collection calls
• Possible elimination of lawsuits and other legal action
• Stop any extra charges to the credit card

Adversity comes upon us when we least expect.  Were asked to take a reduction in pay or perhaps we experience a job loss. As a consumer who is unable to meet the  monthly minimum credit card payments you need to find a way out of this financial situation!

First thoughts are to just do nothing and walk away from the debt.  But that is not the right solution. So you need to start investigating different  methods to correct your financial situation.

The most often methods discussed for consumers in trouble are:

• Consolidation Loan
• Home Equity Loan
• Consumer Consulting Services
• Bankruptcy
• Debt Settlement

In a prefect world, the first three programs would help rearrange the financial situation.  Since you would have money or equity in your residence to qualify for a loan or need assistance in understanding how to better manage my money.

Bankruptcy should always be the last step when considering how to get out of debt.  As a consumer,  do not want to walk away from my debt but somehow pay them back to the lenders. Bankruptcy needs to be discussed with an attorney, who can explain the legal process and its affect on the consumer.

Therefore, debt settlement was a more managed approach to resolving my financial situation.  The one lesson learned during this financial downturn was to tighten my belt and save for the future.  I should use my credit cards only when I can actually repay each month what I spend on the card.  I have learned my lesson. 

So now as a consumer, struggling with credit card debt over $10,000 now is the time to call your debt settlement expert.

Fannie Mae will be giving homeowners loan modification help.  DU Refi Plus will allow a homeowner to refinance their existing mortgage up to 105% of what the property is worth.  If you are upside down more than this on your home you may be out of luck.  You should still talk to your bank or mortgage holder to see if you can get a loan mod from them.

How Do I Qualify For A Loan Modification with Fannie Mae?

1.  You cannot get cash back of more than $2000.

2.  You can only redo a first mortgage.  You cannot pay off the balance of a 2nd mortgage.

3.  You cannot get a fannie mae loan mod with DU Refi Plus if you have an interest only loan.

4.  No refinancing of MyCommunityMortgages.

5.  No Balloon Mortgages.

6. No arms with fixed rate periods of less than 5 years.

Contact a mortgage loan officer to see if you can get a loan modification with the DU Refi Plus.

If you have a loan with CitiMortgage and are having trouble keeping up on your mortgage payment, you may be eligible for a loan modification with Citi.  The first step is to call the loss mitigation department at Citi Mortgage and see what you need to do to get the mortgage loan modification process started.

Citimortgage Loan Modification Requirements Continue Reading »

Will Capital One Negotiate My Card Balance if I’m behind?  With the credit crisis hitting Americans hard, many are falling behind on their credit cards.  I am asked often if the credit cards companies will do credit card modifications like the mortgage industry is doing loan modifications?  The short answer is no.  Credit card companies will not negotiate with you, they want all of their money back with interest.

What Are My Options With Captial One If I Can’t Pay My Credit Card Bill?

Your first step would be to get on the phone with them and see if they will work anything out with you.  Chances are that Capital One will not budge in terms of lowering their interest rates or balance if you are behind.  Your options would be bankruptcy, credit debt negotiation or credit counseling.

What Is Debt Settlement?

Debt Negotiation and Debt Settlement is a process of working out negotiated settlements for less than what you owe with your creditors.  Often you can settle your debt for pennies on the dollar.  Your credit could be negatively affected if you have stopped paying your bills.  It is better than filing for bankruptcy however.

If you are in trouble with your debt don’t put your head in the sand, the soon you ask for help the better.

I just saw on the Phillips & Associates website that they are doing debt negotiation and debt settlement.  The Phillips & Associates company is run by Jeffrey Phillips.   Phillips and Associates is the same company that does DUI and Bankruptcy.  Their commercials are pretty bad.  It looks like they have the people read right off a card.  I cannot see how the actual clients agree to go on TV an embarrass themselves.  They must offer to reduce their legal bills. Continue Reading »

What is Debt Negotiation? Debt Settlement is a process where a debtor negotiates with a creditor and the creditor agrees to a reduced principal amount of payback. Debt Settlement is also know as debt arbitration and debt negotiation. Debt Arbitration is considered to be an honorable way to settle your debts.

Will a creditor really settle debt with a debt negotiation program? Continue Reading »

Did you know that July was originally called Quintilis which is Latin for “fifth month”…and that it was then later named after Julius Caesar in 44BC? It’s true! But on a much more important note… here is some information you might want to know! Continue Reading »

When you settle debts through a debt negotiation program, will you get a 1099 for what you save? You will not get a 1099 if you can demonstrate that you are financially insolvent. IRS Publication 908 states that you must owe more than you have in assets at the time of the debt settlement agreement with your creditor. You would only pay tax on the amount of solvency you have. If you save $5000 on a debt settlement agreement and have $1500 in assets, you would pay tax on $1500. Speak with a tax adviser or tax professional to see how this would apply to you before registering into a debt settlement program.

Do I have to pay income tax if I am in a debt negotiation program? Continue Reading »

Is a non profit CCCS company free? You have seen the ads on TV for consolidating your debt. Their claim is that they are a non profit foundation that is there to help you consolidate your debts into one low monthly payment. It sounds like it is free but it isn’t. A non profit debt consolidation company does charge a fee for their services. It is usually a monthly fee that is part of your payment. Many consumers are unaware that part of their monthly payment if a fee for the debt consolidation company. Continue Reading »

How much does a chapter 13 cost? To file a bankruptcy will cost you about $2000 depending on who files it and where you file it. Bankruptcy should be your last option and you should exhaust other options before you file. If you have additional bankruptcy questions you should contact an attorney in your state. Continue Reading »

Does paying off collections help my fico score? Having open collection accounts can do major damage to your credit score. Just one collection account can drop your credit score over 100 points. This can be the difference between buying a home or not buying a home. Having bad credit will limit the types of credit that you can get as well as the interest rates that you will get. As you can image, having unpaid collections on your credit report can put you in a higher credit risk category. This would most likely cause you to get higher interest rates when you apply for credit. Continue Reading »

Tips on Negotiating your Debt with Bill Collectors and Collection Agencies

Many Americans now feel that their debts are spiraling out of control and there is nothing they can do but have an attorney file for a bankruptcy. Most debtors believe all of those freighting stories told by the bill collectors of the impending doom that faces them. The biggest scare tactic used is utterance of a wage garnishment and seizure of property. The collection agencies usually fail to point out that they will first need to go to court and get a judgment to be able to do anything to you. I recommend that bankruptcy would be your last option in trying to get out of debt. Most debtors jump to quick to do a bankruptcy before examining all the possibilities that exist to resolve the debt. Usually this option is exercised out of fear and wanting it to go away quickly. I hope that this information will educate you in this area of the unknown for you. Continue Reading »

Debt Settlement vs. a Home Equity Line to pay of your Credit Card debt

Getting yourself into debt can be a scary as well as a frustrating experience. Getting hounded by debt collectors night and day can be exhausting as well as emotionally draining. But there are options that you can take to take care of the problem quickly. The two that we are going to discuss in the article are refinancing your home to pay off the debt or doing a debt negotiation program. Continue Reading »

10 Tips on how to do your own Debt Negotiation and work with collection agencies, bill collectors and creditors

If you are going to do your own debt negotiation you are probably going to go up against a tough and aggressive pro. By following these steps you can take the upper hand and save yourself thousands by doing a debt settlement.

I think the first step in the game is to know what the rules of debt collection are. The more information you know about debt collection practices, the less harassment you will get. If a debt collector knows that you know the game, they probably wont mess with you as much. You need to become very familiar with the Fair Debt Collection Practices Act of 1977. You can also get a free booklet for the rules of debt collecting form the National Consumer Law Center. Continue Reading »