As a consumer, you must have a clear understanding of the program you are selecting.  Do not let any lender give you answers to questions that are not clear or you do not understand.  It is the consumer’s responsibility to understand exactly what their monthly mortgage payment will be and if this payment includes property taxes.  The consumer needs to select a program what meets their financial requirements.

When meeting with the lender, the consumer must be do the following:

• Always be truthful to the lender
• Have complete copies of last two (2) federal tax returns including all W-2’s on all borrowers
• Have copy of most recent paystub for all borrowers on the transaction
• Have a copy of last two (2) months bank statements on all accounts and any stock/investment accounts
• If refinancing, have a copy of most recent mortgage statement
• If refinancing, bring copies of original documents in regard to mortgage
• Prepare a list of all assets, including names of banks, average balances along with a list of all liabilities, i.e., auto loans, credit cards, 2^nd home mortgages.  Note the lender can receive this information via a copy of your credit report.  But having the information available at the meeting is important.

At this meeting, the lender will be able to approximate, what your debt to income ratio. The final ratio is determined by credit underwriting. 

By having this information available, the lender should be able to discuss with the consumer various types of loan programs, which will meet the consumer’s financial position.  If you are a new home buyer, it is important that you have money available for a down payment. 

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

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.

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.

Consumer’s today  are buried under a mountain of unsecured debt and their largest asset, their home is losing value. One of the goals for consumer’s in today’s economic climate is to improve their financial condition.

So what does the consumer need to did to get back on track?

Here are five options to consider:

One option is to continue to pay the minimum monthly payments to your creditor for the next 10 to 15 years. This does not eliminate the debt it will continue to climb depending on your interest rate.

The second option is debt consolidation loan which is another way of dealing with your debt by consolidating into one monthly payment. But this does not eliminate your debt it only adds to your problem.

The third option is Bankruptcy. But this is not a pretty way to go for the consumer. As the law’s have changed over the years, it’s not as easy as it once was. You need to contact a lawyer to discuss the differences between Chapter 7 and Chapter 13.

The fourth option is credit counseling / debt management. This is a program offered through non-profit credit counseling agencies. Basically they work out a plan with your creditor in which you pay a specific amount each month and the monies are divided between your creditors.  Again, this is not eliminating debt just adding more interest  to your debt.

The last option to consider is debt settlement.  This is a program in which a third party acts on your behalf to negotiate with your creditors.  Each month you set aside a certain dollar amount as that amount grows, the third party starts negotiating to settle your debt. This process can in some cases eliminate up to 50% of your outstanding debt. 

Debt settlement is the option that many consumers are taking to eliminate credit card debt.

Understanding the history of credit and how you got into this unhealthy financial position  is key if you plan to use a debt settlement program. One of the keys to having a peaceful and happy life is your financial well being.  However, in today’s world that is not easy.

When your grandparents  wanted to purchase a home for example  they would save until they had almost half of the purchase price for  the home. 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.   Yes, the cost of a home in the 1940′s and 1950′s was much less than today’s world.  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.

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

·         35 million pay only the minimum payment each month

·         Average American Family has 8 credit cards.

·         Of the 144 million general purpose credit cards only 55 million pay off their bill 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.

Due to unfortunate circumstances in our nation as well as around the world, many of us are struggling to make ends meet. We have rising prices in the cost of heating and cooling our homes and maintaining our cars. Shoppers are shocked at cost increases in groceries, clothing and other miscellaneous items. How do we manage to deal with these expenses? Those with adjusted ARM home mortgages, car and credit card payments in addition to normal costs of living often just can’t stretch their available income to cover everything and sometimes the house mortgage is one of those left unpaid.

Do Not Give In To Collectors

We frequently receive unwanted and unnecessary threatening phone calls from collection agencies for our past-due credit cards. When faced with choices of which bills to delay a month, we give into the pressure and make the minimum credit card payment. These collection agencies are quite skilled in intimidation and scare-tactics and sometimes that’s the best method for these collectors to get overdue payments as the debtors just want to get rid of the harassment.

Meet Your Living Expenses Before Paying Credit Card Debt

Although it’s not proper to neglect to pay your just debts when money is limited, decisions need to be made as to importance of the bills you are facing. Being on limited income and continuously facing higher costs of living, it’s a necessity to decide on what takes priority for payment and what can take a “backseat” for a month or two.  Housing, car payments, utilities and food costs must be met. Also, to be considered are insurance premiums. In some communities, medical needs will not be met unless one carries insurance, although the cost of these premiums can increase budget costs. State laws require car insurance, because should you not carry liability coverage and are involved in a car
accident, serious legal consequences will follow.

Prioritize Your Bills

After planning your budget and paying the most necessary bills, then should you have money remaining, make those credit card minimum payments. If left without any money, then don’t be stressed out over the unpaid credit card bill(s). It is not likely your wages will be garnished. You will probably receive more unpleasant phone calls from credit card collectors, so calmly explain you’ve paid your main housing/living expenses and have depleted your funds.  If bill collectors get nasty, lose their temper or start being obnoxious, you could lay phone down without hanging up and walk into another room. Losing your “cool” and responding to their verbal abuse lets them “win” which is their real motive or intention.

Catch Up Later On Credit Card Debt

After your financial circumstances improve, plan on catching up on all your overdue bills especially clearing up your credit card indebtedness. Try to pay off the least amount owed first, and then apply that amount to the next higher bill. Eventually, you’ll be able to get yourself out of debt. But be careful that, after doing so, you use wisdom by using credit cards only when absolutely necessary, and if possible by paying the entire balance off each month.  Remember though that the most important issue is in keeping current on your house payments and normal living expenses.  If you want more information on negotiating with bill collectors Negotiating with Collection Agencies, Bill Collectors, and Debt Collectors – 10 Tips.

Debt Free Dave 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.

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 »

The full brunt of the credit crisis is hitting home and more people are concerned and scared about thier financial future.  As well they should be.  If you are burdened with a big debt load heading in to a slowing economy you should be nervous.  Your chances of making it ok will go down dramatically as compared to someone that is not carrying any credit card balances.  If you have debt now, you should be focused on trying to get rid of it rather than taking on new debt or just making minimum payments.

Cut Up Your Credit Cards And Start Using Cash Continue Reading »

Many debtors will wake up one day and ask the question, how did this happen to me.  How did I get in this much debt?  The truth is that it does not happen all at once.  Debt is a consequence of a series of decisions that are usually lies to yourself.  You may tell yourself that you will pay the bill in full when you get it, only to pay the minimum payments.  There may be emotional triggers that push you to buy things that you really do not even want.  You may be trying to fill up that empty hole inside of you.  Unfortunately it is short term pleasure and long term pain.  The joy of a purchase may only last a few minutes or even a few seconds but the reality of paying of a credit card purchase can last for years or even decades.

What Is The Long Term Cost Of Being In Debt? Continue Reading »

Just because you are in debt does not make you a bad person. You are only human. If you were perfect you would be a perfect being and not a human being. You can learn from your mistakes and become a better person for it. I promise that you will come out of your financial circumstances better than when you went into them. Continue Reading »

What debt guru has a better method for getting out of debt?  If you were to match Suze Orman up against Dave Ramsey and their debt free plans, who would win?

How does Suze Orman tell you to get out of debt? 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 »