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.

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.

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 »