There are various kinds of options that consumers are given to get rid of their debts. In your credit  card debt payments have spiraled to 25 percent to 50 percent of your take home pay, you probably need some help with getting that problem corrected.   In today’s economy you are probably reeling from the weight of your credit card bills.  As painful as the situation is – you can fix your financial situation with Debt Settlement.

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.

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 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. 

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.

Henry Ford’s quote is right because every situation, we face needs to be viewed in small pieces.
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. We need to break down what our credit score means and how it is used when measuring the credit worthiness of the consumer.
•    Do you monitor your score on either a monthly or quarterly basis?
•    Did you know that your credit score changes every month?
•    Do you know your credit score? The credit score range can be from300 to 850
•     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 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
•    Public Records, i.e., tax liens, judgement, bankruptcy
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 drag down your credit score.  While delinquency will also affect your credit score but only for a shorter period of time. 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.  You will stop having feelings of being so “lost” with your finances. Because you will now be in complete control of your financial future.

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

Once your credit cards have gone into collections, the fun can really get started.  Creditors and collection agencies can start hounding you and calling at all hours of the night.  If this is the case for you, a game plan for how to deal with them effectively may be in order.  You need to start educating yourself on what a creditor can and can’t do.  You do have protection under the fair debt collection practices act.  Don’t think you have to put up with abusive behavior from the collector.  They may be subject to fines if they are out of line.  Keep track of who is calling you and what they are saying.

1. Don’t talk on the phone to a collection agency. If you get on the phone with them they will try to intimidate you so they can collect more. Remember, the more they collect, the more they make.
2. Send a validation letter to the collector to confirm the debt.
3. Get everything in writing first before you open your checkbook.
4. Keep good records; don’t expect the collector to remember what you had agreed on.
5. Send all correspondence by registered mail.
6. Keep copies of everything
7. If you do call the collector, keep a log of whom and when you called.
8. Follow up a call with a letter.
9. Penalties and interest are typically made up amounts of many added on by the collection agency to increase profits.
10. Time is on your side. The longer you can keep them off your backs, the better settlements you can work out.
11.  Don’t be eager to settle. Take your time. If you are trying to buy a home and you need to have the delinquent account off your credit report, make sure they know about this. Ask them to remove the account from your credit report if you pay them in a lump sum. Remember the collection agency is not your friend, and don’t be intimidated by the creditors.  Usually your worst fears about what can happen won’t. I hope this information will save you thousands of dollars when settling your debts.

Most of us go into panic mode when we receive notices from bill collectors and collection agencies. I know I do. Although it is upsetting, my sense is that most of us are not aware of the risks associated with our unpaid debt accounts. Creditors have many options at their fingertips to get their money. This article is meant to ease your fear about your creditors and to put you in the driver’s seat as you get out of debt.
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.
What Are Secured and Unsecured Debt? Know the type of debt you have. It makes a difference in how you proceed with getting out of debt. There are two types of debt, secured and unsecured debt. Secured debt includes homes, automobiles, and taxes. Unsecured debt includes checks, student loans, personal loans, medical bills, credit cards and department store credit cards.
It is unusual for secured debt to be settled.  If you cannot pay these bills the creditor will most likely foreclose on your home or repossess the automobile. If either of these happens be prepared for the possibility of additional money being charged to you if they cannot sell your home or car for what you owe them. This debt you may be able to settle. With unsecured debts, there is nothing “attached” to the loan for repayment, therefore there is nothing for the creditor to repossess. With nothing to take from you that they can sell, the creditor is more likely going to settle this debt. Make sure to document everything in writing.