When you sign up with a debt consolidation firm, the program involves deliberately ceasing payments to all your creditors to force your accounts into default to attempt settlements for less. If you are current on your accounts, this process will ruin your credit rating. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.
Many people who sign up with “debt consolidation” firms incorrectly assume that they have the power to force your creditors to accept settlements…they don’t. Your creditors have the right to refuse settlements and take you to court. If you’re going to do debt settlement anyway regardless of the risk, then you can do this own your own. You don’t have to pay anyone to wreck your credit rating to attempt settlements…you can do this yourself for free by ceasing payments to your creditors and forcing your accounts into default. Save the money to build an account to offer settlements…If the process works, you can settle for less…if it fails…you’ll see your creditors in court.
Companies like that usually advise you to file bankruptcy, which completely destroys your credit score. They are in business to make a profit, how could it POSSIBLY "cost less" to pay off your debt AND pay them?
Cut up your cards today, quit spending money you don’t have, and start eating nothing but rice & beans.
Then;
Rank your debts lowest to highest.
Pay minimums on all but the smallest balance, and throw everything you can muster at thet one till it’s gone.
Repeat.
Entering into a debt relief or debt settlement program may impact your credit rating negatively.
Freedom Debt Relief is a large, successful settlement company, and has surpassed $500 million in consumer debt settled, according to a November 2009 press release. If you intend to have a consultation with the company, it should disclose over the phone and in writing the pros and cons of entering into a debt settlement program. Freedom Debt Relief is a TASC member, which requires its members disclose the positives and negatives of debt settlement
Debt settlement programs are designed for consumers who are experiencing financial hardships. It is a given that a consumer’s credit rating will be negatively impacted by a debt settlement program, if it has not been negatively harmed by delinquent payments already. It is very important for a consumer to assess his or her financial situation thoroughly. If you can afford to pay your creditors, and you are not having a financial hardship then you should prepare a budget so that you can manage your finances and get yourself out of debt. On the other hand, if you are experiencing a financial hardship and are struggling with monthly payments then you may want to consider alternatives. If this is the case, most alternatives will have a negative impact on your credit rating.
One option is to contact the creditors and try to arrange a payment plan with them. They may be willing to lower the interest rate and possibly lower the monthly payments. However, it will be at the creditor’s discretion to notate a credit report accordingly. This can result in a negative impact to a credit rating.
Another option is a consumer credit counseling program, sometimes called a debt management plan. In a credit counseling program, the consumer is still repaying 100% of the debt but at a lower interest rate. On average, most debt management plans take five years to complete. Although most credit counseling programs do not impact a FICO score, being enrolled in a credit counseling debt management plan appears on a credit report. Unfortunately, many lenders look at enrollment in credit counseling as akin to filing for Chapter 13 bankruptcy or using a third party to re-organize debts.
Debt settlement, also called debt negotiation, is a form of debt consolidation that oftentimes cuts consumer’s total debt in half. Freedom Debt Relief offers debt settlement services. Debt settlement takes, on average, three years to complete. The consumer is not paying creditors during a debt settlement program. This means that debt settlement will negatively impact a consumer’s credit rating for the term of the program. However, debt settlement is usually the fastest and cheapest way to debt freedom. The trade-off is a negative credit rating versus saving money.
It is possible to negotiate the debts yourself. Negotiating your own debt requires a high level of discipline and organizational skills. First, you need to be disciplined in saving money each month in a fund you will use to settle the debts. Building a settlement fund is essential to success in settling with creditors. Second, you must be highly organized. Creditors, generally speaking, do not consider settling or negotiating a debt until a debtor falls behind 120-180 days. At this point the creditor is required to "write-off" the debt, also known as "charge off". Typically, when a debtor has gone delinquent for this amount of time a creditor will negotiate a settlement on the debt. However, it is not as easy as it sounds. You must keep track of which collection agent has bought the debt, and document every instance of communication and interaction with the creditor or collection agent.
Collection agents are motivated to collect as much as possible. Collection agents are aggressive negotiators, and in many cases use verbal abuse as a tactic to wear down or frighten a consumer. Any offers of settlement agreed upon must be put in writing. Negotiating debt is difficult and scary for many people, but it can be done. If you don’t succeed on your own, hire a professional to do it for you.
Entering a debt settlement program does not prevent creditors from trying to collect or pursue legal action. However, having a professional company represent you can alleviate some of the stress involved in settling debt.
Although it might seem odd to pay a fee to save money, experienced debt negotiators will save you far more than the cost of their fee. They know which creditors are willing to negotiate and how much of a settlement they will accept. Due to their network of relationships, they can settle debts you could not on your own.
If your income level does not support a debt settlement approach, consult with a an attorney in your state who has experience in bankruptcy.
I hope this information helps you Find, Save, and Learn.
February 8th, 2010 at 6:51 am
You can use this credit monitoring service to pre-estimate future scores for different scenarios of such payments – credit-report-free.totalh.com
February 8th, 2010 at 6:51 am
When you sign up with a debt consolidation firm, the program involves deliberately ceasing payments to all your creditors to force your accounts into default to attempt settlements for less. If you are current on your accounts, this process will ruin your credit rating. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.
Many people who sign up with “debt consolidation” firms incorrectly assume that they have the power to force your creditors to accept settlements…they don’t. Your creditors have the right to refuse settlements and take you to court. If you’re going to do debt settlement anyway regardless of the risk, then you can do this own your own. You don’t have to pay anyone to wreck your credit rating to attempt settlements…you can do this yourself for free by ceasing payments to your creditors and forcing your accounts into default. Save the money to build an account to offer settlements…If the process works, you can settle for less…if it fails…you’ll see your creditors in court.
February 8th, 2010 at 6:51 am
Companies like that usually advise you to file bankruptcy, which completely destroys your credit score. They are in business to make a profit, how could it POSSIBLY "cost less" to pay off your debt AND pay them?
Cut up your cards today, quit spending money you don’t have, and start eating nothing but rice & beans.
Then;
Rank your debts lowest to highest.
Pay minimums on all but the smallest balance, and throw everything you can muster at thet one till it’s gone.
Repeat.
February 8th, 2010 at 6:51 am
Entering into a debt relief or debt settlement program may impact your credit rating negatively.
Freedom Debt Relief is a large, successful settlement company, and has surpassed $500 million in consumer debt settled, according to a November 2009 press release. If you intend to have a consultation with the company, it should disclose over the phone and in writing the pros and cons of entering into a debt settlement program. Freedom Debt Relief is a TASC member, which requires its members disclose the positives and negatives of debt settlement
Debt settlement programs are designed for consumers who are experiencing financial hardships. It is a given that a consumer’s credit rating will be negatively impacted by a debt settlement program, if it has not been negatively harmed by delinquent payments already. It is very important for a consumer to assess his or her financial situation thoroughly. If you can afford to pay your creditors, and you are not having a financial hardship then you should prepare a budget so that you can manage your finances and get yourself out of debt. On the other hand, if you are experiencing a financial hardship and are struggling with monthly payments then you may want to consider alternatives. If this is the case, most alternatives will have a negative impact on your credit rating.
One option is to contact the creditors and try to arrange a payment plan with them. They may be willing to lower the interest rate and possibly lower the monthly payments. However, it will be at the creditor’s discretion to notate a credit report accordingly. This can result in a negative impact to a credit rating.
Another option is a consumer credit counseling program, sometimes called a debt management plan. In a credit counseling program, the consumer is still repaying 100% of the debt but at a lower interest rate. On average, most debt management plans take five years to complete. Although most credit counseling programs do not impact a FICO score, being enrolled in a credit counseling debt management plan appears on a credit report. Unfortunately, many lenders look at enrollment in credit counseling as akin to filing for Chapter 13 bankruptcy or using a third party to re-organize debts.
Debt settlement, also called debt negotiation, is a form of debt consolidation that oftentimes cuts consumer’s total debt in half. Freedom Debt Relief offers debt settlement services. Debt settlement takes, on average, three years to complete. The consumer is not paying creditors during a debt settlement program. This means that debt settlement will negatively impact a consumer’s credit rating for the term of the program. However, debt settlement is usually the fastest and cheapest way to debt freedom. The trade-off is a negative credit rating versus saving money.
It is possible to negotiate the debts yourself. Negotiating your own debt requires a high level of discipline and organizational skills. First, you need to be disciplined in saving money each month in a fund you will use to settle the debts. Building a settlement fund is essential to success in settling with creditors. Second, you must be highly organized. Creditors, generally speaking, do not consider settling or negotiating a debt until a debtor falls behind 120-180 days. At this point the creditor is required to "write-off" the debt, also known as "charge off". Typically, when a debtor has gone delinquent for this amount of time a creditor will negotiate a settlement on the debt. However, it is not as easy as it sounds. You must keep track of which collection agent has bought the debt, and document every instance of communication and interaction with the creditor or collection agent.
Collection agents are motivated to collect as much as possible. Collection agents are aggressive negotiators, and in many cases use verbal abuse as a tactic to wear down or frighten a consumer. Any offers of settlement agreed upon must be put in writing. Negotiating debt is difficult and scary for many people, but it can be done. If you don’t succeed on your own, hire a professional to do it for you.
Entering a debt settlement program does not prevent creditors from trying to collect or pursue legal action. However, having a professional company represent you can alleviate some of the stress involved in settling debt.
Although it might seem odd to pay a fee to save money, experienced debt negotiators will save you far more than the cost of their fee. They know which creditors are willing to negotiate and how much of a settlement they will accept. Due to their network of relationships, they can settle debts you could not on your own.
If your income level does not support a debt settlement approach, consult with a an attorney in your state who has experience in bankruptcy.
I hope this information helps you Find, Save, and Learn.
Best,
Bill
http://www.bills.com/blog