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Bankruptcy Alternatives -
Bankruptcy Alternatives
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Written by David Banervos
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Tuesday, 22 July 2008 17:36 |
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How we educated their former clients about debt settlement
People often fail to fully understand just how serious bankruptcy is before they consider it. Bankruptcy will stay on your credit report for a decade, frustrating your ability to get a loan, insurance, or even a place to live. With an increasing number of employers checking the credit of potential employees, it can even hurt your chances of getting a job. Far from being quick fix, it can turn your life upside down, and it takes a lot of hard work and a lot time before you can be back on your feet financially again. It should only be considered as absolute last resort, after all other avenues have been explored. The fact of the matter is that bankruptcy is the best option for a very small percentage of people with large amounts of debt.
Everyone else would be better off working with their creditors towards a settlement. Most creditors are just as eager to close the books on your debt as you, and if you approach them in the right way, they can work with you to develop a plan that gets you out of debt a lot faster and saves you a lot of money.
But it is important to understand that not all types of credit can be settled, though the majority of debt that most people contend with can. Typically, you can reach a settlement on most kinds of unsecured loans. This includes things like credit card debt (something most people are pretty familiar with), personal loans, and medical bills. If your car has been repossessed, you may even be able to reach a settlement on the remaining amount you owe on your auto loan. If done right, interest rates or even the amount of these kinds of debts can be slashed down to a much more manageable level.
The debts that can’t usually be settled are secured loans, such as mortgages, home equity lines of credit, and auto loans. In addition, you probably won’t be able to settle payday loans or debts to the IRS in the form of back taxes. You will also probably have to pay your student loans and debts related to utility bills or unpaid rent in full.
If you have a combination of debts can and can’t be settled, however, it still makes a lot of sense to seek a settlement. By negotiating lower rates or balances on some of your debts, it makes you more equipped to pay off the loans that can’t be settled.
When it comes down to it, which would you rather do? Would you rather sit down, form a plan, tighten your belt and relieve yourself of your debt in a matter of a few years? Or would you rather file bankruptcy, thus totally upending your life for at least the next decade and probably more? If debt settlement is at all a feasible option for you, you owe it to yourself and your financial future to find a way to work with your creditors. |
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Last Updated ( Friday, 25 July 2008 15:35 )
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Debt Consolidation -
Debt Consolidation
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Written by David Banervos
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Tuesday, 01 July 2008 18:21 |
Why debt settlement is a better choice for struggling consumers
If you have a sizable debt to contend with, your ears probably perk up whenever an ad for “debt consolidation” plays on television. They make big promises of lower monthly payments lower interest rates, but like with most people who try to sell you a quick fix, these ads aren’t giving you the full picture.
Here are the prime reasons why you should think twice about singing up for a debt consolidation loan.
Treats the Symptoms, Not the Disease
If a construction worker strolls into an emergency room with a nail sticking out of his head and complains of a headache, the doctor isn’t going to just write up a prescription for vicodin and send him on his way. Why? Because that’s just taking care of the pain being caused by the problem, and the not the problem itself
But for some reason, people think it’s OK to do the exact same thing with their debt. They treat the symptom (high balances on credit cards) and not the disease (poor financial habits.) In fact, without first addressing the spending practices that got you into debt in the first place, you a debt consolidation loan might actually get you deeper into debt. By transferring your debt to a different loan, your credit cards are free again for you spend to your heart’s content and, thus essentially doubling your problem if you don’t have your money habits under control.
Keeps You in Debt Longer
The goal of anyone who struggles with credit cards should be to break free from their debt as soon as humanly possible. Yet by taking out a debt consolidation loan, most people do precisely the opposite. Debt consolidation loans constantly boast about how you will be able to make “lower monthly payments,” but the problem is that you shouldn’t want that. You should want to pay as much of your loan as you can possibly afford every month. The less you pay, the more you are just spinning your wheels by paying a lot of the interest and little of the principal, thus forcing you by be stuck with your debt a lot longer than you have to be.
Costs You Even More Money
People who offer debt consolidation loans aren’t offering their services out of the kindness of their hearts. They expect to make a buck, and specifically they expect to make a buck off of you. Depending on your credit, the interest that they offer is usually not much better, or even worse, than what you pay to the credit car companies themselves. And they come loaded with hidden costs, like fees and insurance, that can drive the cost of consolidating through the roof.
Can Lower Your Credit score
Taking out a debt consolidation loan raises a red flag for a lot of lenders. It signals that you have a tendency to open more credit accounts that you handle and are forced to take out yet another loan just to handle it all. This means that it won’t just take you longer to get out of debt, it will take you longer to build up your credit. Which in turn means paying higher interest rates for any future loans you might want to take out, such as an auto loan or mortgage.
It is much smarter to simply reexamine how you are handling your money and negotiating with your creditors. |
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Last Updated ( Friday, 25 July 2008 15:30 )
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Bankruptcy Alternatives -
Bankruptcy Alternatives
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Written by David Banervos
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Tuesday, 17 June 2008 15:09 |
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How tightening the belt now can feed your future If you are burdened with debt, the worst thing that you can do is just pay your minimum payments every month and just hope that eventually things will work out. That won’t just keep you in debt a lot longer, it will also result you paying thousands more than you have to in interest. If you truly want to get out of debt, you need a plan. And one of the most effective plans that debtors can use to get out of debt is the “snowball method.”
Here is how to slowly build up a lot of money towards paying your debt.
List Your Debts- Make a list of all your debts in order from lowest balance to the highest. For most people, a low balance credit card usually going to be at the top and their mortgage is usually going to be at the bottom.
Calculate Your Minimum Payments - Your next step is to figure out what you have to pay at a minimum to keep your creditor happy and keep your credit score from dropping.
Determine How Much Extra You Can Pay - In addition to the minimum, figure out how much more of your income you are able to spend on paying off your debts. And try to be honest with yourself on this number. Try and look at other unnecessary expenses that you can cut out to increase the amount you can pour into your debt, like unused gym memberships or a cell phone plan that has more minutes than what you actually use. If you can cut out eating out every month, do that too and add the cash you save to the money you pay towards your debt. Every little way that you can slash your expenses now will greatly help your financial future.
Start Paying the SMALLEST Debt First - This “extra” money that you can pour into your debt should first go towards your smallest balance, in addition the minimum monthly payment. For most people, this means that you smallest debt will be payed off relatively quickly.
Move on the Next Smallest – After your smallest debt is payed off, begin paying off your second smallest debts. To determine the amount you pay, add up the minimum payment of your smallest debt, the minimum payment of your next smallest, plus the “extra” you were paying before. So say the minimum on your previous smallest was $20, the minimum on your next smallest is $30, and your “extra” is $100, you now start paying $150 dollars towards what is currently your smallest debt.
Continue Until Debt Free- You keep doing this, adding up the amount you pay to your smallest debts until it “snowballs” into a larger and larger amount. By the time you get the end of the line, not only are your debts freed up, you have a lot of leftover money each month that you can pour into savings.
The genius of the snowball method is that it doesn’t just address the financial element of getting out of debt. It also addresses the emotional aspect of debt relief. By paying off the smallest debt quickly, you get the almost instant gratification of being relieved of debt, which encourages you to keep pressing forward with your debt relief strategy. |
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Last Updated ( Friday, 25 July 2008 15:16 )
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About Debt Settlement -
Articles
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Written by Barbara Haise
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Saturday, 14 June 2008 05:30 |
We live in a credit based society and the price of almost every product sold in the market is rapidly increasing as inflation rates rise. All of the freedoms that credit might provide will often end in the entrapment of debt. Unfortunately for many, this usually results in bankruptcy. However, there is a better option called debt settlement.
Along with modern times come modern solutions to your financial troubles and the key to this is debt settlement. This is the process of eliminating your current debts for a price much less than the amount you actually owe. Through the help of a debt settlement company who specializes in dealing with the relentless creditors, you can soon be debt-free. The company will provide you with a professional consultant who represents you and your interests. Together, you set up a payment plan that you can truly afford and then they negotiate a settlement with your creditors.
All you have to do is contact the debt settlement company and provide them with the information they need and they will do all of the leg-work for you. The debt settlement company will arrange a trust account for you and then they contact your creditors to begin arbitration. Due to their knowledge and relationship with the creditors they are often able to negotiate a reduced total debt by 40 to 60 percent. The amount of time it will take to clear the debt will vary depending on how much you owe and how much you can afford to pay. This amount is based on your disposable income, i.e. what is left in your wallet after you have paid all of your expenses and taxes.
There are so many reasons why people with overwhelming debt choose debt settlement. Primarily, you will be allowed to pay less and you won’t have a bankruptcy haunting you for the next 10 years. Also, instead of paying the amount that you owe plus the late fees and interest, you make an affordable payment to the debt settlement company whose focus is reducing your total amount owed. Other benefits include the fact that you can develop a settlement plan with an extended amount of time to pay your debts if needed. Some settlements will allow you to pay the amount within 2 to 5 years or even longer. This can be very helpful if your creditor is demanding immediate payment and you really do not have enough money to pay them in that short period of time.
Another huge benefit is that you avoid the harassing and abusive calls coming from creditors because they now deal with your debt settlement consultant. Moreover, the debt settlement company will also make sure that you no longer receive such calls. The job of a debt settlement company is to negotiate on your behalf. They are there to help eliminate the pressure and stress added to your life due to crushing debt and hounding creditors. If you have bad-debt you should definitely consider this option. |
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Last Updated ( Saturday, 14 June 2008 05:36 )
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About Debt Settlement -
Articles
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Written by David Banervos
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Saturday, 26 April 2008 00:51 |
If you are reading this you are either curious about debt settlement or you already know you need an alternative to bankruptcy. Ignoring the problem won't make it go away so what do you do? Well, you can declare bankruptcy but then be labeled for the next 10 years every time somebody runs your credit. At least with debt settlement you can overcome some of the stigma after a few years. I personally believe that negotiating your debt is better option. At least you're making an effort to pay back some of what you borrowed. Besides, you have probably paid what you owe in late fees and interest already anyway. Did you know that creditors can raise your interest rate if you have been late on a different line of credit? Example: if you have paid on time every time with your Wells Fargo Visa but you're late on your JC Penney even once, Wells can raise your interest rate because your risk is higher. Talk about piling on! That's nuts. The whole system is nuts! What can you do? Well, don't take it in the shorts any more. Get off the debt treadmill and start over.
Settling your debt isn't the easiest thing in the world to do, though. It takes a commitment to finally see light of day. Know that at the end of it you're going to be debt free and with what you've learned through the process you're not going to let yourself get into that situation again. Real debt relief comes at the end of the process when you can lick your wounds and recover. The weight that is off your shoulders at that moment when your debt negotiator calls you to tell you they are finally done is incredible. Think about that for a second. What would it feel like for you to finally be out of debt? I kind of think back to those Lipton ice tea commercials of the 80's where the guy is holding a glass of ice tea and falls back into the pool. Refreshing? Eh...maybe more of a shock to the system. Let's try something better...how about a good nights sleep when you wake up on your own without the ringing alarm clock and you have nothing scheduled all day; you can just do what you want with no deadline. Ahhhh....there we go. I love a good night's sleep, don't you? |
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