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

 In the beginning, the consumer used the card judiciously and paid off the balance in full monthly. However over time, the consumer started paying only the monthly minimum payment. From time to time because the economic climate was on the upswing, the consumer had equity in their homes. Because of the equity, the consumer would refinance their homes at a lower rate and take monies out to pay off their unsecured debt.  This way of handling finances was alright as long as the economic was in a positive position.

Due to today’s economy – consumers are facing financial hardships, lost of job, reduced salaries, and divorce or faced a medical emergency along with the adjusted interest rate on their mortgages and increased unsecured credit card debt. 

The consumers are faced with the reality of how to get out of debt. In most cases, this is the first time many consumers were faced with these uncertain financial times.  So the consumer start looking for ways to pay off their financial obligations.

One of the options the consumer is selecting is a debt settlement program.  Debt settlement is a method by which a third party negotiates with the lenders to reduce your obligation by up to 50% of the outstanding debt.  The consumer puts aside a set amount of monies each month into a “trust/escrow” account over a period of 12 to 48 months depending upon the amount of their credit card debt.  The debt settlement company starts to negotiate when at least half of the lowest balance is in the account.  This proceed is repeated until all debts are settled.

This is not an easy fix.  However, the amount of monies placed into the trust/escrow” account is normally less than the combined monthly minimum payments. By entering into this program, it will show the lender you want to repay your obligations but need help because of the consumer’s most recent financial hardship. The majority of lenders are willing to accept a settlement of half because if the consumer files bankruptcy the odds are the lenders will receive nothing.  By receiving nothing this affects the lenders bottom line and is reflects as loan losses on their financial statements. So call your debt settlement expert today to discuss

The majority of consumers want to payoff their obligation either monthly or in full. However they are having a hard time of making ends meet in today economic climate.  The consumer is on an emotional roller coaster and is seeking ways to make ends meet.

Today’s consumers are overwhelmed with unsecured credit card debt.  They are unable to maintain making the monthly minimum payments on their credit cards.  The reason why the consumer is seeking some type of debt relief is because they have incurred a recent financial hardship.

One of the options that consumers are considering is using a debt settlement company.  A debt settlement company is a third party which will negotiate with the lenders on behalf of the consumer.  In most cases, a debt settlement company is able to reduce the consumer’s outstanding balances by up to 40% to 50%.  So considering that a consumer may have more than $10,000 in unsecured credit cards this debt might be cut in half.  The savings to the consumer is monthly interest on their cards and the debt reduced from $10,000 to $5,000. 

The consumer is asking, “Why would a lender accept half of the obligation due to them.”  The answer is simple. If the consumer files for bankruptcy, historically there is no money available for the unsecured lenders. In other words, the lenders are willing to take something rather than receive nothing on the obligation.  If a consumer does file bankruptcy then the lender has to write-off as a bad debt this obligation which affects their bottom line.

Using a debt settlement program is not a quick fix or an overnight solution to the consumer’s situation. However what it does is allow the consumer to save monies into a “trust/escrow” account over a period of time.  Normally, this amount is less than what their combined monthly minimum payments are on the debt.  The debt settlement company begins negotiation with the lender when at least half the monies are saved against the lowest outstanding debt.

Debt settlement is an option for many consumers today. Therefore, call your debt settlement expert today to discuss how they can help you.

One of the ways to get relief is to use a debt settlement program.  This program is not an easy fix or an overnight miracle for the consumer, this program can take between 12 to 48 months depending on the size of your debt.  Basically the debt settlement program works with the consumer to establish a payment plan by which monies are placed monthly into a “trust/escrow account.” When a less half of the monies owed to a lender on your lowest balance credit card, then the debt settlement expert will begin to negotiate on the consumer’s behalf.  The monthly payments into the account are normally much less than the current minimum monthly credit card payments.  The debt settlement company is usually able to negotiate a 40 to 50 percent reduction of the consumer’s debt. 

As a consumer you are asking why, would a lender expect this type of negotiation? The underlying answer is the lenders are more willing to take something against the outstanding debt than to have the consumer file bankruptcy.  Normally, when a consumer files bankruptcy, the secured creditors are pay first from the consumer’s assets and the unsecured creditors receive little to nothing from the consumer.  It is a win-win for everyone, the consumer and the lender. 

Before entering into any program, the consumer needs to understand how the program works and its affect on them.  Debt settlement may not work for everyone.  It is not a quick fix or overnight miracle for the consumer.  So if anyone tells you they can wipe way your debt instantly or in less than one month. You need to seek out another company, since the process can take between 12 months to 48 months. 

When you sign up with a debt settlement company, the consumer should ask the following questions:

• How long has they been in business
• Is the staff trained and certified
• What are the exact fees for this service
• What is the name of the bank and officer responsible for the trust account
• Are they listed with the Better Business Bureau
• Who will exactly be handling my account
• Ask for a contact list for the company

A legitimate business should able and willing to answer any questions you might have about their services. Also how your account will be handled on either a day to day bases or monthly bases once you have established the parameters.

As a consumer, you need to also know the drawbacks of a debt settlement program.  However, these drawbacks are less serious than filing bankruptcy or doing nothing about your situation:

·         Credit Score may be hurt – but your score has already dropped because of late payments or non-payments. You score will improve as your payoff the debt.

·         Tax ramifications – The IRS requires you to report as taxable income any amount of debt settlement in exceed of $600. This means an increase to your income.

·         Collections – The consumer may continue to receive calls from the lenders until they are informed you are using a debt settlement program. However the call may continue since it up to the individual lenders.

·         Fraud – As a consumer you might select the wrong debt settlement company.

The key to a successful resolution to your financial situation is to understand the progress and know the debt settlement company you are working with.

Again, this is no easy progress, but with determination and a willingness to solve the problem. A debt settlement program can and will work for you and your family.

The biggest problem facing today’s consumer is unsecure debt.  When facing this financial challenge the consumer may want to consider a debt settlement program. They want to paid off their credit cards but have been struggling because of possible job loss or reduced salary or a medical emergency.

Let’s take a quick review of what it’s costing the consumer on their unsecured credit cards.  For example:

·         Credit Card debt of $30,000

·         3 years of interest at 19% is $17,100

·         5 years of interest at 19% is $28,500

The above interest figures do not calculate any principal reduction on the $30,000 outstanding. So you can see that you are not making any headway on reducing your debt only adding to your financial situation.

If you have faced a financial hardship, then consider using the debt settlement method.  Under a debt settlement program, a third party will negotiate with the lenders to reduce you debt possible up 50%.  This would mean you would cut your outstanding balances in half and would save up to $17,100 or $28,500 over the next three to five years.

Debt settlement may not be the right program for everyone.  However as a consumer, you need to call a consultant today to discuss a program that is right for you and your family.

Today consumers are facing a  hardship that  has been caused by not only the economic climate of losing their jobs or reduced hours to part-time but also by a medical emergency. Perhaps only making the monthly minimum payments on their credit cards but they were able to meet their monthly mortgage and car payments on time.

So during these trying economic times, the consumer is not only stressed out because of their job lost but their inability to meet their obligations.  The consumer must decide what is best for them and their family. Because of the emotional toll it is taking on them.

After the consumer, has reviewed the various options such as, debt consolidation, debt consulting, bankruptcy, do nothing or debt settlement.  They will see that a debt settlement option may be their best method to unburden themselves.

As what is debt settlement? Debt settlement is a managed approach used by a third party company.  This company will negotiate on behalf of the consumer to reduce their debt by up to 50% of the outstanding current balance.  Basically, the consumer places a set amount of money each month into a “trust account” until approximately half of what is owe on their lowest credit card balance. It is when the debt settlement company will start to negotiate with the lenders.  The lenders are more willing to take something on the balances than have the consumer file bankruptcy on them.  In a bankruptcy case, depending on the assets of the consumer, normally secured lenders get repaid first then the unsecured lenders.  In most cases, the unsecured lenders receive no money from the consumer.

The consumer wants to do the right thing not only for themselves but their families. A debt settlement program can take from 12 months to 48 months to complete based upon the outstanding credit card balances.  This program may cost the consumer less than their current monthly minimum payments.  It is not a quick fix program but a program that will allow the consumer the ability to repay their debt and repair their credit score.

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.

Credit card debt is almost a way of life in today’s economical time’s.   It’s so very easy to take out our credit cards and purchase everything from groceries to our utility bills on plastic. Some of the time people can pay these off the next month and they do not carry a balance moving forward . However, for others – this is just a way of life.

Which leads us to the question of what if the unthinkable happens?  I’ve been living paycheck to paycheck and living beyond my means.  Of course this will lead to a degree of worry, anxiety, fear and perhaps to denial of the severity of your financial situation.  Because  you don’t have a reserve or back up plans.  So, y ou have become obsessed with your money problems of missed payments, bill collectors calling and possible litigation.

Needless to say, it’s common for the consumer to avoid the collection calls which further adds fuel to the fire because the collectors just become more aggressive in their tactics.  You begin to experience depression but you need to get back to reality and deal with the situation head on!!!

In visiting Dave Ramsey’s website I came upon this comment….”Laziness is a character flaw.  You need to be willing to work and sacrifice in order to fix the situations that you created with your own irresponsibility.  If you are not willing, then you cannot be helped.”  I agree with this statement 100 percent. 

The consumer needs to toll up his sleeves and get ready to work hard.  You need to rip up the credit cards and start by being honest with yourself and your creditors.  It’s time to get proactive and deal with your situation today.

Contact a consultant who can answer your questions and put you on a path of financial freedom!

As a consumer, we need to understand the meaning of the word credit.  Credit is considered as either secured or unsecured monies loaned to you by a lender, in return for future payment.  Lenders or creditors who have advanced to you monies to purchase your home or credit card companies/retail stores  which allow you to charge purchases with the understanding you will pay them principal and interest over a period of time.

A good credit score means you are a low risk consumer while a lower credit score means you are a riskier borrower. Credit scores from the three major credit bureau’s (Equifax, Experian or TranUnion) range from 300 to 850.

However, according to a recent article in “USA TODAY”, lenders are clamping down on credit and credit scores are taking a hit. The lenders are reviewing all of their consumer credit cards and making determinations about who is using their credit cards.  Lenders are closing credit card accounts and lowering credit limits for millions of consumers who have never paid late. When a card is closed by a lender this effects your credit score.

However, maybe as a consumer you had a fair to good credit score.  But do to the recent economic environment you are not able to keep up with your financial obligations.  This is going to affect your credit score since late payments, mortgage modifications and high balances are now taking a bigger toll on your scores. 

So when you are looking at debt settlement program and you are informed that your credit score will take a hit. You credit score may had already taken a hit because of your late payments and too much credit with high balances prior to entering into a debt settlement program. 

As a consumer, do you feel like the title of the 1961 Broadway play, “Stop The World – I Want to Get Off.” The consumer is not sure where to turn or how to get off the treadmill which is causing emotional and financial stress to them and their family. This is how many consumers are feeling with their mounting debt based upon financial hardship.

One of the alternatives to this situation is to consider a debt settlement company. The consumer is wondering how these companies know of their financial situation.  Basically, these companies have established credit parameters with the various credit companies and receiving list of names and addresses such as, debt over $10,000 or high balances whether you are current or not on your payments.

The consumer should ask the debt settlement company the following:

·         What are your proven strategies?

·         What is your success rate?

·         Are you listed with the Better Business Bureau?

·         How long have you been in business?

The consumer should be aware that if they try to negotiate with a lender on their own. The lender in some cases will not talk to the consumer unless they are already 60 to 90 days delinquent.  If you are already delinquent this is going to hurt your credit score and can not be blamed on a debt settlement company.

One of the key’s in using a debt settlement company is establishing:

• The consumer has some ability to pay a set amount each month
• That the debt settlement program is sound
• That a debt settlement is better than a charge off on their credit report
• The consumer needs to be upfront with the debt settlement company about their financial situation
• The consumer needs to stay in involved in the process.
• The consumer needs to document all contact with the settlement company and have a clear understanding of the program.

The consumer needs to remember it is their responsible. There is no quick fix for solving the consumer’s debt issues.  However, there is a way out of this situation.  Contact our debt settlement expert today to discuss your options and get started on your pre-approval.

What is debt settlement? The consumer has been bombard with unsolicited mailers and advertisements on television about debt settlement.  So, with that being said what do I need to know before moving forward?

Is Debt Settlement a good alternative to get out of debt?  Debt settlement is when a third party company negotiates on the behalf of the consumer to reduce outstanding unsecured debts.  The consumer needs to be aware of all the steps involved in using a debt settlement company. Before deciding on a debt settlement company, the consumer needs to ask themselves the following questions:

• Does the consumer understand have their credit score will be effected
• What has caused my financial situation, i.e. lost job, medical emergency
• What are my alternatives, debt consolidation, debt counseling, bankruptcy
• Is the consumer ready to work their way out of debt

When selecting a debt settlement company, the most important issue is having a clear understanding of how debt settlement program works. Here are a few steps to determine if a debt settlement program will work for the consumer:

• List all of your unsecured debt. Is it more than $10,000?
• What is the total of your current monthly minimum payments.
• What can you afford to pay monthly?
• Are you currently late on your unsecured credit cards?
• Are you committed to establishing a budget and living within you current means?

If you have answered yes to any of the above questions then you are a candidate for debt settlement.  The key to completing a debt settlement program is knowing 1) you can make the new established programs monthly minimum payment, 2) know that the debt settlement company will start to negotiate with the lenders when you have approximately half of your lowest balances in an trust account, 3) know your credit score will be effected in the beginning, and 4) know you maybe subject to taxes on the unpaid balances.

It’s time for you to move forward and speak with a representative today!

As a consumer you have been bombarded with ways to get out of debt.  If you have unsecured debt of more than $10,000 and  you have been receiving letters from various companies or attorney’s for debt settlement companies.  But as a consumer you need to determine if debt settlement will work for you and your family.

As a consumer you need to know the steps involved in this process and if it is the solution for you and your family. 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. 

Here are a few of the steps of that process:

·         Consumer stop using their credit cards

·         Consumer stops making monthly payment to the lenders

·         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 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. 

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.  Then consider a good debt settlement company as a way out of your current financial situation.

As the new school year begins it’s time for the consumer’s to take hold of their unsecured debt.  This debt will only grow over the next several months as the holidays approach and will continue to add pressure to the family situation.

So how does the consumer stop this pressure and get out of debt?  One of the ways to put the brakes on this situation is to consider a debt settlement program. A debt settlement program is designed to reduce the overall unsecured debt of the consumer.

The debt settlement program will have some possible drawbacks for the consumer which need to be considered.  The consumer’s credit report will take a hit in the beginning of this process however the consumer’s credit may already been hurt by:

·         Too high of outstanding balances

·         Late Payments

·         Too much credit

·         Tax liens, judgment’s, repossessions, etc

The program establishes a “trust account” into which monthly payments are make until there is enough money to begin to negotiate with the lender. In most cases, the debt settlement company can reduce your debt up to 50% or more. This may be a better  alternative than to file bankruptcy or doing nothing about the situation. If you are considering bankruptcy please consult with an attorney before taking that step or at least call a debt settlement company to understand your option.

Other consideration that the unpaid balance maybe considered income and is therefore taxable under your normal tax rate.

If the consumer does consider the debt settlement option.  They then had started the journey of getting out of debt.  One of the positives to possible come out of this unfortunate situation is the consumer is now motivated to learn how to handle their expenses and money in the future. 

There is no easy fix to large amounts of unsecured debt. But the consumer needs to face the situation head-on a deal with it in a responsible manner.  So call Debt Negotiation Zone  today to discuss the complete ins and outs of the program.  Give you and your family a new peace of mind and start anew.

In today’s society many Americans are addicted to buying almost everything on credit. The retailers make it possible for us to thrive on this concept with  buying everything on credit.  Perhaps out of convenience – to simplify their life or maybe out of personal or economical hardship.

However, it doesn’t take long before your wallet is filled up with bank cards and department store cards.  Most people think that it is easy to pay them off at the end of the month.  Easier said than done. Many people start to justify reasons to use the cards.  It’s easier than to part with cash.  Then it’s the Holidays, presents to buy, short trips, dinner out with friends, the reasons are endless. 

The debt builds up slowly with no  major purchases to show for.  And before you know it – you can be thousands of dollars in debt with no end in sight.  This type of consumer debt is considered unsecured debt verses secured debt.  The difference between the two types of debt is at secured debt is backed by some type of collateral with fixed payments to reduce the debt while unsecured has high interest rates, no tax advantages and is not collateralized.

The consumer continues to build up debt because they are paying only the bear bone minimum. The credit card companies only require you to make a minimum monthly payment of between 2 to 3 percent of your balance in order to continue using your card while continuing to add a monthly finance charge to your balance along with late fees and over limit fees in some cases.

 In the beginning, the consumer feels it’s alright about repaying only the monthly minimum payment because they believe the next month they will be able to paid more on their account. This gives the consumer a feeling of confidence to continue to spend more freely  and leads them down the path of spending more than they earn each month.  However this spiraling debt only continues to grow and the consumer is now facing added pressure to met their financial obligations.   

Because of this spiraling debt, the consumer needs to consider how to get out of debt.  One of the options for the consumer is debt settlement.  Debt settlement is a method by which a third party works on the consumer’s behalf to negotiate with the credit card companies.  This process requires the consumer to stop using their credit cards, budget their finances and start saving a certain amount of money each month.  This money is placed in a “trust” account and until it achieves at least half of your lowest balance credit card before the third party company can start negotiating.  This process may take between 12 months to 48 months to clear all of your unsecured debt. 

Now is the time to explore how our debt settlement company can help you out of the depths of financial problems.

In today’s economical climate, there are a lot of people who are looking for debt relief on their credit card debt. In order to successfully tackle your financial situation you need to get organized and understand your situation. So, understanding the type of debt you have is a good place to start.

There are two types of debt secured and unsecured. In a secured loan, the debtors personal assets are guaranteed as collateral for the loan. In some cases, if the debtor is unable to repay the loan on time, then the lending agency can assume the assets as collateral.

 Credit card debt is considered “unsecured ” debt and the most common of the two. In unsecured debt there is no collateral to collect if you default therefore the credit card company has the right to sharply increase your interest rate which can make it nearly impossible to payoff particularly if you are making the monthly minimum payments.  Needless to say, you can start sinking further into debt.

Debt settlement is a process which debtors can turn to. The debt settlement company negotiates on your behalf with creditors to reduce the overall debts in exchange for an agreement upon settlement. The consumer makes payments on a monthly basis and over a period of time enough funds are built up allowing the settlement negotiations to begin. The debt settlement companies typically have built up relationships with the credit card companies and can reach an agreement rather quickly.

Living in debt can be very scary and sometimes it just takes patience and doing your homework and understanding your own financial situation. Once you make the decision – debt settlement can put you on the path of living debt free.

Start today by calling 1.866.963.9988

A historical look at a debt settlement program is nothing new for the consumer or for the lenders in regard to unsecured debt.  Some type of settlement practice has been in place for over 100 years.  The plan may not have been called debt settlement it might have been know as debt relief or debt forgiveness depending on the amount of the settlement.

The only form of relief for a consumer was bankruptcy, debt counseling or debt consolidation. Debt settlement was a little known way for consumer’s to find a way out from unsecured credit card debt. 

If you call your credit card company to work out a deal, they typical will work out a payment plan for the whole outstanding balance.  Therefore, the consumer is not gaining any ground is trying to get out of debt. Plus the consumer might simply walk away from the debt altogether, by filing bankruptcy then the credit card companies received almost nothing on the outstanding debt.  This hurts the financial bottom line of the credit card companies.  Therefore, they are more willing to work with a debt settlement company and receive at least 50% or less on the outstanding debt than maybe nothing at all from the consumer. 

The phrase, “a bird in hand is better than nothing” can apply to why credit card companies are willing to negotiate with a debt settlement company. It’s a process which requires discipline by the consumer, but it is a better way to handle your outstanding debts, without having to file bankruptcy or doing nothing about your debt. 

One question that every consumer asks is, why would a credit card company, be willing to work with a debt settlement company instead of with me the consumer directly?  The answer to that question is simply. The debt settlement company has a better understanding of the consumer laws and has experience dealing with the credit card companies.

So take at first step and talk to an experienced debt settlement representative today!

As a consumer, you need to know the definitions and differences between debt settlement and debt consolidation.

Debt consolidation is described as taking out a loan to pay off other unsecured financial obligations. 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.  However, a consolidation loan normally involves securing this new loan against an asset which serves as collateral for this obligation.  A home equity loan was cheaper than the combined interest rates on the consumers outstanding unsecured credit card debt. The interest rate was normally a floating rate associated with prime rate plus a specific percentage above prime. But this does not solve the problem for the consumer, since they only added new debt to their current situation and repeated the cycle of using their credit cards. 

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

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. By using a debt settlement program, in some cases the outstanding debt by can be reduced by more than 50%. The process involves you putting aside a certain amount of money each month to accumulate monies for the negotiations to begin on your behalf. 

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

Con 1 – The creditor who lowers or completely stops charging you interest will most likely freeze your account or even close your account so you can’t use it once you are in this program. This will happen even if you had been paying them perfectly before. You being in the program suggests to them that you are in trouble. It does not suggest that you are getting help and that they should be considerate of that.

Con 2 – Being in credit counseling is marked on your credit report. Each creditor who you include in your program will probably note on your credit report that you are in credit counseling. Most often I have seen it noted something like: “Customer in CCC”. This notation supposedly doesn’t hurt your credit score, but it definitely will impact someone who reviews your credit report looking to make a decision about giving you credit.

Con 3 – If you are trying to get a mortgage, some loan programs won’t allow you to qualify if you are in the program. The viewpoint on credit counseling has gotten better over the years, but in some cases, in terms of loan qualification, being in credit counseling is looked at just as bad as bankruptcy. Again, this doesn’t seem quite fair as you put yourself into credit counseling so you could pay your debt, make things right, and avoid going bankrupt. Go figure.

Con 4 – This is only a problem if you don’t start the program correctly. When you are going to start a credit counseling program it could take several months for the program to be set up to start paying your creditors. You must make sure that you continue to pay your creditors until your payment plan starts. If you don’t make sure these bills get paid and you had good credit your credit will suffer dramatically.
Only You Can Decide

With the onset of the credit crunch in 2007, millions of people saw their mortgage rates and their mortgage payments skyrocket.  Home foreclosures have hit new records across the country.  The credit crunch caused other impacts in the financial markets as well.  As the economy began to slow, consumers began to run into problems paying their unsecured and credit card debts.  Defaults on credit cards have reached an all time high according to MBNA.  Unfortunately, once you are in financial hardship there are not too many great choices in terms of getting out of debt.
How Does Debt Consolidation Work?

One option is debt consolidation, which will put all of your bills into one payment and possibly get your interest payments down.  Often times the payments are not much different than they were before the problem started.  Many people would like to take this option but they just can not afford it.

Facts About Bankruptcy
Another option would be to file for a Bankruptcy.  This would give you two options, one would be a Chapter 13 and the other would be a Chapter 7 bankruptcy.  A Chapter 7 is total liquidation which means that the debt is completely wiped out.  This can be very hard to get in light of the new bankruptcy laws.  The other option is to file a Chapter 13 bankruptcy.  A Chapter 13 does not wipe the debt away; you are basically just doing a debt restructure.  You will have to pay some of what you owe back.  This is up to the U.S. Bankruptcy Court to decide however.  Both bankruptcy options will have long lasting negative effects on your credit report and impact your FICO score for up to ten years.
What Is Debt Negotiation?

The other option is to do debt negotiation, or otherwise known as debt settlement.  You should only consider doing a debt settlement if you are unable to keep up on your bills (already behind on them) and you have determined that debt consolidation, Consumer Credit Counseling, or debt management programs are out of your budget.  A debt settlement program can have you out of debt in less than 36 months with no negative long term effects to your credit. You can also save yourself a lot of money.  The average debt negotiation program can save you 40-60 percent of what you owe your creditors.

I would like to point out that debt negotiation is not a free pass to dismiss paying your bills.  If you think that you are going to go out and charge up a storm to only put yourself in a program, you may be setting yourself up for fraud.  A reputable debt settlement firm would not take you on if the majority of your credit card debt is new.  Most people who enter a debt negotiation program have either lost jobs or had catastrophic medical issues to deal with.  People that do register for a debt reduction program do have integrity in that they want to avoid a bankruptcy.  They really do want to pay their bills.  If they did not want to, they would just do nothing.  To most consumers a bankruptcy is not an honorable solution.  People know that they borrowed the money and most feel an obligation to make some kind of amends with their creditors. Use Credit Wisely

My best advice is to do real planning when it comes to taking on new debt.  When you are going to make a purchase with credit you must be very clear as to what the impact of the new debt will be on your life.  It is an obligation and it is something that once you make it, there is no turning back.  What may seem like a good idea now may be a disaster in the future.  Make a budget and know what you can afford to do.  I know that we all want things but from my own experience I would rather have piece of mind than a bunch of junk in my house that I have to worry about paying for.  Debt Free is the way for me.  That is my mantra.  Try it out, it might help you sleep at night.  My goal is that you are happy and prosperous in your life.
Written by Debt Free Dave who has been in the mortgage and consumer finance business for over 10 years. He has a Finance and Real Estate degree from the University of Arizona. This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.

Is There A Difference Between Debt Settlement Companies and Debt Negotiation?  I am often asked questions about the debt settlment industry.  One of the most asked questions is the difference between debt settlement and debt negotiation companies.  The truth is that they are basically the same thing.

What Is A Debt Settlement Company? Continue Reading »

Credit Debt Settlement Is Better Than Bankruptcy For Settlement Of Debt?  Millions of Americans are facing a mountain of debt and unsure about how to pay for it.  What are the options of getting out of debt when you have your back against the wall?  You can consider credit settlement, debt management, debt settlement program or debt consolidation.  Continue Reading »

Can you go to jail if you do not pay your credit card bill?  No, If you stop paying your credit cards, your life will become a lot more difficult.  The first thing that will happen is that your credit score will drop like a rock.  A few late payments can drop your fico score as much as 200 points.  Your credit card company is going to raise your interest rates and start tacking on late fees.

When Will Creditors Starting Calling Me If I Get Behind On My Bills? Continue Reading »

Tough times call for tough decisions when it comes to money.  If you are facing a mountain of debt in a slow economy you should be nervous.  Large debt is what brings people down fast.  Once you start getting behind on your bills, it may be impossible to catch up.  It is important to tackle you debt head on and pay it off as soon as possible.  If you have to eat kraft macaroni and cheese and top ramen every meal it will be worth it.  You need to start living by your needs and not your wants.  Your wants are what got you in a pickle in the first place.  Just think that you are learning a new habit.  It may be painful at first but you can do it.

Cut Back On Expenses Where You Can To Pay Off Bills Faster Continue Reading »

What will happen if I stop paying my bills? It is important to know what will happen if you are unable to pay your monthly debt obligations. The first 30 day late that you have your credit score is going to drop like a rock. I have seen credit scores drop as much as 100 points just for one 30 day late. Your interest rates will probably go up as well. You credit card contract has a provision call the universal default rate. This is the rate they can charge you when you do not make a payment. Continue Reading »