Now it has been over a couple of years of our country being swamped in a terrible financial recession. A lot of financial analysts have been promising to fix the program and get the US back to being the financial leader of the world, but it looks more and more like this may not be occurring again for quite a long period of time.
We have seen a number of misgivings that have brought us to such a low point in our financial timeline, starting from the mortgage sector to the automobile industry. However there is another issue that is seriously hurting American debtors at this point and that is enormous amounts of consumer credit card debt. We have come to an all time high dealing with credit card debt, and it only continues to get more out of hand.
Thankfully for overwhelmed Americans there are debt relief programs on the market for consumers who are in search of debt freedom. The most sensible have shown to be consumer credit counseling and credit card debt settlement. Both have their respective pros and cons and will aide Americans who are ensnaired deep in credit card debt.
With utilizing credit counseling debtors can look to get their interest rates greatly reduced. One more advantage of the structured plan is that the monthly payment will be a fixed payment for the duration of the program, thus allowing them to pay down their bills in a much quicker amount of time. In addition it is only one monthly payment, which significantly helps aide the problem of shelling out tons of payments to numerous creditors each four weeks.
There are however problems with credit counseling these problems are that if the debtor goes one month delinquent they can get kicked off of the plan. Also the plan does show negatively to the credit bureaus during the program, which could effect getting a home loan. More than 70% of consumers who sign into credit counseling plans end up dropping off.
Then there is credit card debt relief, this plan can really assist overwhelmed consumers trapped in debt. This plan is nice because the original balances are decreased not the interest rate. So the consumer will look to save around 50% of what they currently are obligated to payback. Plus this plan will assist the debtor out of debt within just a couple of short years. In the middle of a recession this is proving to be the most lucrative method of credit card debt relief.
The negative aspect of debt settlement is that the consumer must slip delinquent on the accounts in order for the banks to be willing to settle the debt. So this obviously has an extremely negative effect on the debtors credit history, plus the debtor will receive some form of collection activity from the banks, this might be very nerve racking.
Whatever option is taken they can both assist the consumer in finding debt freedom. And in the middle of this financial catastrophe consumers seriously cannot manage to be trapped in debt for eons shelling out large amounts of capital to the blood sucking credit card banks. Once out of debt then consumers can honestly begin to contribute to helping the economy get back off the ground and soaring once again.
Using a smart budget is a must in this economic climate. It’s extremely imperative to know every dime that comes in and goes out. This can prevent you from buying merchandise you honestly cannot afford yet. Spending too much is something that normally takes place by accident. Nobody leaves their home hoping to create a financial crisis for themselves, however it takes place all the time. That is normally due to the lack of keeping track of precisely how much cash you have and how much can be used on what.
When using consumer credit cards to make most of your purchases, it becomes even more imperative to keep keen observation on your statements. Most debtors go over the credit line because they are impulse buying too much and force themselves near the credit line. When the monthly finance charges are put to work, that pushes them over the limit and the penalty fee procedure begins. This is how such multitudes of accounts spiral out of control and wind up in serious arrears. Credit card debt is normally responsible for the biggest type of debt in most American families.
Untold numbers of consumers continue keep realizing they are stuck deep in consumer credit card debt and haven’t a clue how to remove themselves from debt. What has been quietly successful for multitudes of these consumers has been debt settlement, this plan for debt relief has been aiding Americans keep thousands on the amount they are obligated to payback.
Perhaps the sweetest benefit to enrolling into a debt settlement program is that the consumer can expect to realistically get out of debt within just a few short years, and not waste dozens of years running on the credit treadmill doing nothing but spinning your tires. Blood sucking minimum payments are what in reality hurt people’s bottom lines each month, they never seem to go down, and they are not supposed too. The credit card banks purposefully devise minimum payments to imprison consumers in debt for the rest of their lives.
Lots of these credit card situations normally sprout from debtor’s irresponsible money habits, so these need to be changed so the consumer can stay out of debt after the debt settlement program. Once the program is completed an altercation in the consumer’s mindset must happen, surviving off of credit cards is what shoves people into this situation to begin with. Remaining out of debt is imperative; it will only keep someone down, nothing more.
One issue is for sure once out of debt everyday living will be much more enjoyable once again. Imagine all that income that is paid to credit cards every month staying in your bank account? What would you do? Purchase a auto, embark on a relaxing vacation, save money for children’s education. A lot of these things will never become possible when you are wedged in credit card debt and haven’t a clue of how to free yourself. Don’t allow yourself and your loved ones to turn into another statistic. Talk to a debt settlement representative right away and get out of debt prior to it being too late. Nothing is worse than losing your money to the greedy credit card banks, who make billions of dollars every year off of unsuspecting consumers who loyally pay them money each month.
If you are like many people who are having financial difficulties and are trying to find a way to stay afloat, there are a few options. You can work with your banks on a debt settlement at minimum, or you can file bankruptcy and restructure your debt. In this article, I will explain the consequences of debt settlement that will affect not only your credit score but possible future ramifications.
Debt settlement is generally an agreement made by a lender to a debtor in order to pay off a certain amount of the outstanding debt. The amount can be between 20% and 75% of what is owed. However, there are certain things that a debtor must watch out when trying to decide what to do.
First of all, many people do not realize that a bank or lender would much rather a debtor work out a debt settlement agreement where they would some of their money back, rather than have the debtor file bankruptcy. If a debtor files bankruptcy, and the lender is an unsecured creditor, it is very possible that they could end up with nothing as the secured lenders are reimbursed first. However, debt settlement agreements are not easy to negotiate and many debt settlement companies know this.
These debt settlement companies “prey” on people who have gone behind on their debt payments. After the first or second missed payment, your credit score is affected and the credit reporting agencies are able to “sell” your information on advertising lists. Now, while this seems to be an unacceptable practice, it is within the writing of your credit card agreements or other credit documents that allow this.
As soon as these debt settlement companies get a hold of the “default lists” from the reporting agencies, they will start their advertising campaigns. If you have been in default, you may have wondered how the debt settlement companies got your information. Never the less, these companies will send out notifications stating how they can and will help to negotiate settlements of your debt, whether it be with a credit card company or a mortgage banker.
The problem with these debt settlement companies is that they occasionally do not fully disclose the fees and seldomly guarantee results. This is because they actually cannot guarantee that any debt will be settled. It is entirely up to the lender to accept any debt settlement agreement.
The other problem with the debt settlement companies is that they will charge enormous fees (often up front). The fees for these companies is in the area of 15% to 25% of the total debt owed. If the actual debt that is settled is not pennies on the dollar, it is quite possible that the debtor can owe almost as much as they did before.
There are also many scam debt settlement companies out there who are preying on people in their most vulnerable of time. They offer to negotiate a debt settlement agreement for a smaller flat fee. Enticed by the small amount, many of these debtors will sign up for the program, pre-pay the fee, and never hear from the company again. It is just like out of the movie “Boiler Room”.
So, in order to minimize the amount of risk, it is important for debtors to know their options and get as much information as they can. If you are considering a debt settlement company, always do a background test on them and check the FTC and Better Business Bureau to make sure they are legitimate. Debt settlement is a much better avenue than a full bankruptcy, but you need to make sure you are dealing with a reputable company.
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In almost every industry, especially in today’s economy, businesses are vying for every consumer they can. More efficient marketing, better customer service, whatever they can do they’re doing. So why are the debt settlement companies actively turning away possibly the best customer for their product? It’s simple…the money.
Virtually every debt settlement commercial you hear on the radio or tv the phrase “if you have more than $10K in credit card debt we can help you”. If you were to call the number on that ad with only seven thousand dollars in debt, odds are that they won’t help you. In fact, they often tell you to call the creditors yourself. Something they adamantly lobby against publicly, unless of course you have less than their minimum debt requirement, then they promote it. Based on my experience I estimate that approximately 1 in 5 calls into a debt settlement company does not qualify because the debt amount is below the company’s standards. Thousands of potential clients are being turned away at a time when they need them the most.
The industry standard fee is 15 percent of the debt enrolled into the program. Debt settlement companies are simply not willing to bring in clients when making less than $1500 (15% of $10,000). This happens to be the most confusing aspect of the industry to me. At a time when State Attorney Generals are requesting settlement data from the larger companies to determine the industry’s legitimacy they are turning away clients that would help their cause. Clients that have less than $10K in debt are more likely to settle and be debt free faster. It seems simple, they have less debt, have to save less money and therefore would increase the industry’s statistics when it comes to how many people they help get out of debt.
So why won’t they allow these clients into their program? I can’t be the only one that sees such an obvious win-win situation can I? Enroll more clients and increase your debt free statistics at the same time, I’m missing the downside. The debt settlement companies are missing a huge opportunity. The data that is being requested from the Attorney Generals has to do with how many clients have gotten out of debt from their program. Most, if not all, of the companies do not have the data. They may have partial data but it’s incomplete. And the data they do have arguably is subjective to what they categorize as “out of debt”. Some of the debt negotiation companies may consider someone who has settled one of two debts with their program but the rest without as a win and therefore mark them as debt free. They have a spectacular chance to increase the requested data and settlement percentages while increasing revenue at the same time.
It is true however that the clients with the lower debt amounts seem to require more attention and work. This in most cases is the reason behind the minimum debt requirements. They see the smaller debts and figure it would be time better spent on clients with larger debt and larger fees. So where does that leave the thousands of consumers with less than ten thousand in debt? Apparently on their own. Websites like iSettledit.com have started to pop up to help those settle debt on their own. And if you look hard enough you’ll find a few of the smaller debt settlement companies taking debt amounts down to five thousand.
Enrollments are down, marketing costs are up and the lawsuits from state Attorney Generals are coming fast and furious. It’s not very often that you are given the key to your own jail cell. The companies that are attempting to gather the requested data are doing the right thing. And I’d like to take this opportunity to say that their are some ethical debt settlement companies out there doing right by their clients. You just have to look harder in this industry to find them.
If you fall below that coveted ten thousand mark, come and join the thousands of people that have started talking and negotiating with their creditors on their terms. iSettledit.com is the internet’s largest FREE resource for do it yourself debt settlement. We have the tips, tools and research to help you begin your journey to financial freedom.
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Working through a consolidation service should be the main priority for those who are in debts but want to achieve the best possible debt settlement. It will help you to pay off creditors with money you get in one large amount and at the same time to salvage your credit rating.
The process to consolidate your debt is not as easy as it appears. At first you should ask your creditor to eliminate or reduce interest carried forward or brought forward. If you won’t do this you can be trapped by the creditors because they can raise the equated monthly emoluments, which mostly comes from increased interest rates. So you can be forced to pay a penalty if you’re not able to pay off the increased interest rate. Though the actual dollar amount of the penalty will be insignificant, with his already-spiraling debt, the burden of those extra few dollars needlessly added will add a lot to his mental burden.
If you will take control and begin to eliminate your interest and penalty immediately your creditor will reciprocate by giving you the benefit of the doubt, because he doesn’t risk loosing his principal any more.
Another step you should take is to consolidate all your credit card accounts by converting them into a single payment instrument, which is called a single bill. Than you should calculate the average interest applied to more than one credit card account debt. After this calculation you can use the formula for the consolidated credit card account to repay the optimum (lowest interest rate) amount only, thus reducing the average interest rate.
To improve the situation you’ll have to take care of your credit card history to make it better by immediate paying off all of your creditors. As soon as the sum you receive is shared out among you creditors, each of them will cancel your debt. This would be the time when you and your credit begin to recover. This would be advantageous for both of creditors because principle amount that was almost sure to end up as a write-off recovers.
The problems with debts and debt collecting are huge. Want a proof? Big debt collecting companies outsource their jobs even in India to keep in contact with the debtors. Getting a call from trained operator that says you can pay just a few bucks and this will show you are good does not work, because people share the feeling this is a delusion.
This comes from the experience of the people whose debts passed the statute of limitations and the debt itself has vanished from the credit report system. Sending a dollar on the back balance means that the debt is automatically renewed again.
This is not a rule of a thumb for all debts, but many Americans and people round the globe are ready to trust these words, because they give them hope.
Instead they start using "dodge the harassment" techniques.
For example, bill collecting is mostly done either by phone call or by mail. People can change phone number. They call a carrier to stop the service, then start up with a new carrier under a different name.
Another thing is to find a local mailbox service and rent a box. With the new address, send in to the USPS a form indicating a change of address where instead of the drop address they use the address of a huge office building with many people and offices inside.
Some even go to a local rubber stamps’ firm and order the one saying ‘DECEASED’ and use it to stamp with red ink on the surface and later on drop at any USPS station.
Are these steps helping people to eliminate debts? Surely they are not. This is nothing but dodging and looks like a spy game – people do not like being spies in real life. We all love to live a normal life, without hiding from the agencies.
That is why the best tactics is not to dodge the debts. Intstead know how to avoid debts and eliminate the debts that are current for you.
If you organize your money and know how to and when to pay – you got a way out.
Help yourself by 90% to become debt free just using the steps published below:
1- KNOW what you owe.
Know and identify clearly what you owe. Create a debt list with details for example:
|
Name/Item |
Amount |
Interest rate |
Monthly Payment |
|
Credit card |
$5600 |
3% |
$680 |
|
…. |
… |
… |
… |
And identify which payment has the highest rate thus allocate the highest priority to it.
2- Avoid creating new debts.
When you are already in debt, do NOT create a new debt. Do the best – get a savings strategy.
3- Decrease your expenses by developing a clear strategy and try to increase your income.
4- Avoid using your credit card.
5- Create a list of items you plan to purchase and know how much you plan to spend on it.
6 – As soon as you develop a plan with your monthly income and expenses, you can set the good amount for paying your debts. Remember, as we discussed previously, adding an extra amount to your monthly debts payment can decrease the interest payment and save time.
This is How the Debt Free Reduction Plan
Works in Real Life and
SAVES
Payer from Extra Bucks in Expenses and Time in Debts
The secret to find a tiny extra amount and pay it over the same amount each month until all debts are repaid. As one debt is paid off, apply that payment amount to another debt.
Simple example will explain everything.
With the current monthly payment of $850 you can pay an additional $180 each month ($1,030 of total monthly payment) and your debts get repaid in 7 years and 10 months. This will save you $23,617 in interest charges.
By allocating $180 you save $23.617!
By following your Debt Free Reduction Plan, you save $23,617.86 in interest which is equivalent to 39.5% and have your debts paid off in 7 years and 10 months and not 13 years and 2 months.
Please check this post for the details of payments summary with the new $1,030 monthly payments.
The table below shows a fair calculation of the bad part of the debt story. Just look at it with your own eyes:
|
Name |
Amount |
Interest |
Payment |
Interest Paid |
% of interest |
|
Home Loan |
$36,000 |
%14 |
$500 |
$42,996.48 |
119% |
|
Credit Card |
$3,500 |
%18 |
$100 |
$1500.05 |
43% |
|
Car Loan |
$21,000 |
%10 |
$250 |
$15,269.57 |
73% |
This means that:
Home loan needs 13 years and 2 months to be paid off
Car loan needs 12 years and 2 months to be paid off.
Credit card needs 4 years and 3 months to be paid off.
Total: $60.500
Interest: $59.766.10
But the good news is that you can pay for all this just $120.266 with recreating a repayment plan. This can save you time and money.
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