Negotiate credit card debt » Credit Counseling

How To Avoid Bankruptcy & Get Out Of Debt Faster Using Debt Negotiation!

admin — Wed, 23 Jun 2010 08:31:57 +0000

Has credit card debt got you thinking about bankruptcy?

You’re not the only one these days. Even with the new bankruptcy laws, credit card debt continues to climb. Unfortunately for most of us, our paychecks don’t climb as quickly.

If you’re on the verge of bankruptcy, you may have another alternative.

Debt negotiation is a process where you negotiate with your creditors to pay off your debts at a reduced amount – for example, if you owe $12,000, you can negotiation a payoff of $5,000. The benefit for the creditor is that they get more money than they may have through bankruptcy, and they get the money sooner. The benefit for you is obvious – you get out of debt faster, and save lots of money in interest.

Where do you get the money to pay off the debt?

Take the money you would have normally used to pay your credit card bills, put it aside, and when you accumulate enough to pay off the debt, send in the reduced amount you agreed to.

If this sounds confusing, that’s ok. It’s really not.

There are many professional companies that will do all the work for you, and charge you a percentage of the savings.

I can speak from experience (I built up a lot of debt trying to start a sporting goods business, which didn’t quite work out) that even with the fees, this is a good deal – plus you save a lot money by not having to pay the high interest rates on your credit card bills.

Sure, it is a more aggressive approach to getting out of debt than making minimum payments, using credit counseling, getting a debt consolidation loan, or borrowing from a friend or relative. But in the end, you’ll get out of debt faster…

And avoid bankruptcy!

If you’ve never heard of debt negotiation (also called debt settlement), that’s ok too, not many people have. I didn’t until I began to seriously consider bankruptcy.

One reason many people are hesitant to consider debt negotiation is that it goes on your credit report. Sorry to tell you, but having lots of debt (even if you pay on time), making payments late, even credit counseling – all go on your credit report and can negatively effect your credit. And (of course) bankruptcy is a big negative!

In my case, getting out of debt, removing all the financial stress, and being able to live a normal life were well worth it. With so much debt, having good credit was meaningless anyway.

Plus, I was able to get all but one of the negative items off my credit report (that’s a topic for another discussion), and my credit is now back to normal. In fact, I now get more credit card offers than I can handle – and fortunately, I can now throw them all in the trash!

When money is tight, and debt is high, there aren’t many simple answers.

But if you are already considering bankruptcy, then debt negotiation might be the right alternative to help you get out of debt faster!

By: Kris Bickell

Debt Negotiation Advice – How a Proven Settlement Company Can Reduce Your Debt Fast

admin — Wed, 28 Apr 2010 00:56:31 +0000

You have been searching most desperately for debt relief. Do not worry; you are not the only one who is doing so. Most US citizens are searching for debt relief to handle their Credit card debt. What are the various options available to you?

The options fall in broadly three categories; debt counseling, settlement, and bankruptcy. Let us take a look at all three and see which option is the best for you. If you are a small time debtor with a few hundred dollars of Credit card debt, counseling is the best option for you. You need not be even reading this article. If you have come this far it is needless to state that you are down with Credit card debt of more than a few thousand dollars. In this case you need to look at debt relief through bankruptcy or a debt settlement.

Bankruptcy is a legal procedure and needs to be taken very seriously. It has certain nuances and requires detailed documentation. The biggest disadvantages of bankruptcy are two; it does not discharge all types of debt and will cause a huge dent in your credit score. If you though that you could max out all your Credit cards and file bankruptcy you were really mistaken. Debt acquired without the intention of paying back amounts to fraud and can not be discharged by bankruptcy.

Take a look at debt settlement. You need to sign up with a debt settlement company for debt relief. After that you stop paying your installments and answering collection calls. The settlement company will do it on your behalf. You can go in for a consolidation loan to pay up 40 to 50 percent of your outstanding debt at one go. In exchange for a one time payment the debt settlement company will negotiate a waiver for you. Balance of the amount will be waived legally.

The consolidation loan comes at a decent rate of interest with easy installments. You become debt free within two to three years.

By: Lisa Archer-Jones

Difference Between Debt Negotiation and Credit Counseling

admin — Tue, 27 Apr 2010 12:29:09 +0000

When looking for a way to settle debts, undoubtedly you will come across these two options. Basically debt negotiation is when you negotiate the debt with your creditors. This can either be done by you personally or you can get help from the professionals. This plan is normally chosen by consumers who have trouble making their minimums each month. A new payment plan will then be worked out which might include the following:

Pay Off Credit Cards – Tips to Overcome Debt and Obtain Financial Freedom

admin — Sun, 18 Apr 2010 09:56:35 +0000

Deciding to pay off credit cards is one of the smartest financial decisions you can make. Unfortunately, many Americans have become addicted to credit cards. We use them for everything and whip out our plastic without ever stopping to think how we are going to repay our debts. The problem is millions of people have fallen into a financial trap which is quickly leading them to bankruptcy.

In order to pay off credit cards, the first thing you need to do is stop using them. Experts suggest cutting up cards to avoid temptation. However, a large percentage of people would rather cut off their right hand than their plastic. If you can’t bring yourself to destroy your credit cards, at least remove them from your wallet and safely store them away. Consider using a bank safe deposit box. Your credit cards will be protected by the bank and out of your house; helping reduce temptation and ease of use.

Next, you need to develop a plan to pay off credit card debts. Some financial experts recommend paying off cards with large balances first. Others recommend paying off small balances first, then attacking the larger balanced cards. The one thing experts agree on is paying off credit cards with the highest rate of interest, regardless of the balance due.

The goal of any debt elimination plan is to create a plan you can actually adhere to. While it is tempting to go all-out and eradicate all debt in a short period of time, few people can actually accomplish that goal. Keep in mind it took a long time to create this financial mess and it will take a while to get out from under it.

If creating a financial plan becomes too difficult, consider obtaining credit counseling. By having a professional review your finances, you can gain a better understanding of your spending habits. Credit counselors can offer suggestions on the best strategy to pay off credit cards and outstanding debts. In some instances, credit counselors can help negotiate with your creditors to reduce interest rates, eliminate late fees or reduce balances.

Another option for paying off credit cards is through debt consolidation. This option is not without risk and should be given careful consideration. Debt consolidation loans are usually reserved for homeowners. Using the equity in your home, mortgage lenders provide a second loan using your home as collateral. Outstanding debts are paid off with the monies received from the home equity loan.

While it can be tempting to pay off credit cards using a home equity loan, consider the fact that home equity loans are paid over 10 to 15 years. By extending the terms, you could potentially be paying considerably more in the long run. Be certain to calculate the true cost of debt consolidation loans before using your home to secure a second mortgage note.

Debtors with substantial credit card debt might benefit from debt settlement. While this technique can reduce the amount of debt owed, it can seriously blemish your credit. Debt settlement is generally negotiated through debt settlement companies or law firms. Debt settlers negotiate with creditors to reduce outstanding balances by as much as 50-percent.

Debt settlement companies generally charge a fee based on a percentage of the debtor’s overall debt. For instance, if you owe $100,000 in debt, the debt settlement company may charge $10,000. While this may sound like a lot of money, keep in mind debt settlers might be able to reduce that $100,000 down to $50,000. Even paying $10,000 in fees, you will still be saving $40,000.

The consequences of debt settlement may outweigh the benefits. Be certain you understand the pros and cons should you decide to use debt settlement to pay off credit cards.

By: Simon Volkov

Debt Negotiation versus Debt Management – Which Is Right for You?

admin — Wed, 14 Apr 2010 19:55:29 +0000

When you’re struggling with debt and looking for profession help, you have
four options: credit counseling, debt negotiation, debt management, or debt
consolidation. While credit counseling and debt consolidation are both pretty
straightforward services, many people have trouble understanding the difference
between debt negotiation and debt management. This article compares the two
services, and it will help you to determine which service is right for you.
First, ask yourself these questions:

Does My Problem Stem From An Inability To Afford My Debt Payments?

If you answered yes to this question, debt negotiation is probably the choice
for you. Debt negotiation services call your creditors on your behalf and
negotiate lower payments. You keep control of sending out your payments each
month, but your debt negotiation company will negotiate payments with your
creditors that you can afford. Additionally, if your reasons for being unable to
afford your debt payments stem from a circumstance that is not beyond your
control, credit counseling is usually available.

Does My Problem Stem From An Inability To Both Afford and Manage My Debt
Payments?

If you answered yes to this question, then you’re probably in need of the
services of a debt management company. In addition to negotiating lower payments
with your creditors, debt management companies will distribute your payments to
your creditors on your behalf. You simply send them one combined monthly
payment. If you have trouble remembering to pay your bills on time every month,
your credit will greatly benefit from the services of a company that ensures
timely payments.

Debt management differs from debt consolidation in that debt consolidation is a
loan that consolidates all of your debts, and debt management is just a service
that calculates the balance of all of your payments and combines them for you.
With debt management, you still hold all of your original credit accounts.

The most important part of seeking professional debt services is getting
counseling in order to prevent future debt problems. Any professional debt
service should also provide counseling in order to teach you how to stay out of
debt once their services have ceased. Debt services are not meant to be a way
for you to escape your financial responsibilities; rather, they are a way for
you to educate yourself on responsible handling of your credit and debt.

By: Carrie Reeder

5 Guidelines For Help With Medical Debt

admin — Wed, 24 Mar 2010 21:21:19 +0000

Medical debt is actually a bigger factor in people filing for bankruptcy then credit card debt. Don’t be a statistic and file for bankruptcy if you are plagued with medical debt! Below are some guidelines which can help you pay off or deal with your medical debt instead of filling for bankruptcy.

Don’t transfer medical debt to a credit card

Avoid transferring any medical debt you have to a credit card. Doing a balance transfer to a credit card is not a good decision because usually the interest you will incur will significantly raise your total balance. Moreover, usually the interest rate is lower on medical bills versus a credit card. Furthermore, if you transfer the medical debt balance to a credit card you usually will reduce your chance of getting Medicaid. Medicaid eligibility is largely determined by your gross income. Therefore, any medical debt you have lowers your gross income whereas any credit card debt you have will not lower your gross income.

Be proactive and stay on top of your bills

Second, be proactive with your medical bills. Missing payments can severely hurt your credit and can result in additional fees and interest. Therefore, the more proactive you are with your medical bills the better chance you have of preventing your credit score from declining.

Negotiate payment plans if unable to pay and/or work with credit counselors

If you are unable to make payments call the hospital or doctor’s office you have medical bills and try to negotiate a payment plan that fits your budget. If you feel more comfortable, have a debt settlement or credit counseling company do this for you. These companies are experts in negotiating with creditors (hospitals, third party billing agencies, collection agencies etc) to either help you get a more reasonable payment plan and even sometimes negotiate your total medical debt to a lower balance amount. To start this process, fill out the form at the top here. Make sure you record the companies, names, numbers, and the dates of phone calls for anyone you are dealing with (whether you are negotiating directly or having a company negotiate for you).

Look to charity organizations for help

By doing a simple search online, you can probably find many non profit organizations, churches, or community organizations that might be willing to help you with your medical debt. Realize though, that most organizations usually help those individuals who are the neediest first.

Apply for Medicaid

If possible look to apply for Medicaid. Medicaid is a dual sponsored program by federal and state funding. Each state offers Medicaid and the plans vary from state to state. Try to research your state and see if you are eligible for Medicaid. Depending on your state, past medical bills may be covered or partially covered by your state Medicaid plan. Here is a link to get started: http://www.cms.hhs.gov

By: Manny Vetti

What Happens If You Do Not Pay Credit Card Debt?

admin — Thu, 18 Feb 2010 07:39:07 +0000

What happens if you do not pay credit card debt seems be a question that many people are asking during today’s economy. This question will not be answered the same depending on what you plan to do about not being able to make your credit card payments.

If you fall behind on credit card payments and become paralyzed to the point where you ignore the situation you are in, you are going to have problems. You will get collection calls from your credit card company for about six months. After that time, your credit card company may sell your account to a third party collection agency. They can be very harassing and down right nasty.

With the economy being what it is, more and more credit card companies and collection agencies are taking legal action. They will place a judgment on your credit report and in many cases will garnish you wages for the outstanding balance on your account. This is something you want to avoid at all cost. So, the sooner you face reality and begin to deal with your situation the better off you will be.

It is best to work with your lender and see what type of hardship programs they offer. Credit counseling may also be an option for you, but you will still have to make a 2 percent payment each month. Your collection calls will stop, your unsecured debt will be consolidated into one monthly payment, your fees will stop and your interest rates will be reduced significantly. But not everyone is able to make a minimum payment.

Debt settlement is growing in popularity as many people are being faced with bankruptcy. This is an alternative that can have you debt free in 12-36 months. Debt settlement is a debt help option where your credit card balances are reduced through negotiation.

By: Marjorie Salada

Credit Card Debt Bankruptcy – How to Negotiate a Settlement Deal and Avoid Bankruptcy

admin — Mon, 25 Jan 2010 23:30:37 +0000

There are a number of reasons why credit card debt bankruptcy should be avoided at all costs. Debt settlement denotes an attempt to reduce your debts. Credit counseling and debt consolidation are better alternatives to it, but depending upon your condition, negotiating a settlement deal might save you from foreclosure or bankruptcy. Filing for bankruptcy means a major blow to your credit options for the next seven to ten years.

Why should you opt for card debt settlement?

• Settlement, undesirable as it is, is still better for your credit ratings than Card Debt Bankruptcy.
• If you are already behind on your payments, debt settlement can assist in restoring your credit.
• Most settlement services will require you to stop using a credit card or take out loans during this period, so you learn to manage your money more carefully.

You can settle your debts on your own, but to ensure more profitable results, it is always advisable to hire a professional service. These settlement services are experts in saving you from card debt bankruptcy. They do the negotiation and handle all your related paper works for you. The company will review your debts to find out which all can probably be settled. Card debt settlement is pretty common, whereas mortgages and student loans cannot be negotiated in 9 out of 10 cases.

Once you have applied for settlement, the settlement company will assess your accounts and then approach your creditors for a settlement. Most settlements are for 30%-50% of the total balance. However there can be cases when it is as low as 20% or high up to 75%-80%. A good settlement service doesn’t guarantee any specific rate or suggest adding a “credit repair”.

Your debt condition determines how long it will take you to get a settlement. The time span may range from a few months to a few years. You may either be asked to pay small amounts within a time frame or lump sums to pay off the negotiated amounts.

However, please remember that debt settlement also affects your credit rating negatively. Besides, according to the IRS, if you get a settlement of more than $600, it is considered an income and can be taxable. Combine this with your settlement charges and you might end up spending a considerable amount. Lastly, there is no guarantee that your creditor can surely be persuaded to settle your debts. Thus, opt for debt settlement only when you do not have any means other than credit card debt bankruptcy left. If you are in a position to pay off your debts, try credit counseling or debt consolidation instead.

By: Sankalan Baidya

How to Eliminate Unsecured Credit Card Debt

admin — Sat, 23 Jan 2010 09:22:34 +0000

Everyone’s debt situation is unique and determining what will work best for you begins with categorizing your debt. Whether your debt is secured or unsecured significantly effects the measures you can take to eliminate debt.

Secured debt is a loan which is “secured” by property. Simply put, if the bank can come and take something from you if you don’t pay (ie; home, car) then the debt is secured.

Unsecured debt is the most common type of debt and is typically in the form of credit card debt.

Eliminating Unsecured Debt

The three most common ways to eliminate unsecured debt are

1. paying as agreed

2. bankruptcy

3. reaching a settlement with the creditor for less than the balance due – also known as debt settlement or debt negotiation

Bankruptcy is rarely a viable option. Due to the changes to the Bankruptcy Law in 2004 by the Bush administration, estimates are that less than 10% of people who file for bankruptcy are successfully discharging any debt. Most have to pay it back now under Chapter 13.

Credit Counseling and Debt Consolidation services typically focus on eliminating your debt by settling with your creditor for less than the balance due. These services are typically owned by large banks and credit companies and typically charge a fee. The good news is, this is something you can do on your own.

Settle For Less than the Balance Due

The key to a successful settlement is leverage. If a bank thinks they can get more out of you, they will not settle. This means that you may have to go months without making any payments. This will reflect poorly on your credit report and affect your credit score, but it is a necessary to obtain a good settlement.

During the time you are not making payments to the credit card company they will constantly attempt to contact you to discuss it. This is best dealt with from the very beginning by sending them a letter requesting that they only contact you in writing. Also, it is very important that you familiarize yourself with your rights under the Fair Debt Collections Practices Act and the Fair Credit Reporting Act. Collections representatives often behave in unscrupulous ways and knowing your rights is your key to fighting back.

Once you have sufficient leverage against the company it is time to attempt a settlement. A realistic goal would be to settle the debt for between 35%-50% of the balance. Contact the bank or credit card company directly and they will likely transfer you to their collections department. Once in touch with the collections representative simply let them know you wish to resolve the debt. Typically, they will make you an offer to settle for 65%-80% of the balance before you ever make an offer to pay. Let them know what you do have; an initial offer of 15%-25% of the balance is reasonable. They may tell you no or tell you that they have to speak with their manager but continue the negotiation as necessary to settle within the range that you desire.

Some credit companies are more apt to settle than others. For instance, American Express can be a very difficult company to settle with for less than 60%. Search the internet for information on your particular bank or credit card company to see how others have fared.

By: Adam Tijerina

Medical Debt Options Including Credit Counseling

admin — Sat, 02 Jan 2010 16:29:26 +0000

Credit counseling is one way to help reduce your medical debt or credit card debt but it is not always guaranteed that a company or organization can help settle or negotiate down your debt with creditors in regards to medical, credit card, and other unsecured debt.

When faced with climbing medical bills & credit cards, it is important to understand that you have three viable options and 1 worst case scenario option:

1) Negotiate directly with your creditors (hospital, doctor’s offices, credit card company)
2) Refinance your home to pay debt (value of house must be greater than current loan)
3) Work with unsecured debt specialists (credit counseling companies)
4) Declare Bankruptcy

When you negotiate with your creditors it is important to do it as soon as you feel you can’t make payments. Negotiating with a collection agency is very difficult as compared to working with a hospital, doctor’s office, or credit card company.

Refinancing your home is a last resort. With downward housing prices you do not want to be taking the remaining equity or cushion you have in a piece of property. Refinancing can be beneficial to pay off medical debt and credit cards if the interest rate on a mortgage is less than that on your current loans. However, this should be a last resort for you as refinancing ends up costing you more money in the long run because you are usually paying back a loan over 15 or 30 years. You should pursue option 1 and 3 before looking to refinance (if you can refinance).

Your third option is to work with unsecured debt specialists that focus on medical debt and credit card debt. Many companies usually can reduce your debt or reduce the amount you owe creditors for a small fee because they are experts in debt negotiation. It is important to make sure that a company or organization you intend to work with is on your state’s approved credit counseling list or the US Department of Justice’s. Use our links below to look up a Federal approved credit counseling agencies by state. Furthermore, many local agencies, universities, local governments, credit unions, and even your company may offer assistance with debt counseling.

Your last option is to declare bankruptcy. Bankruptcy can be vicious and leave you with nothing left to your name and in other cases it can be reasonable. However, for usually a period of 10 years your credit report will be tarnished making you ineligible for car loans, a mortgage and even credit cards. Moreover, some things you cannot avoid with bankruptcy are: student loans, child support, alimony and back taxes. Moreover, the information on your bankruptcy will be publicly made available by Federal, State, and/or local authorizes. In summary, it is not a good option.

Credit counseling is a viable option if you don’t have the time to negotiate with your creditors directly It is important to be proactive with your debt and utilize options 1 and 3 above before 2. If successful, you can be well on your way to settling your debt and making manageable payments if necessary each month. Becoming debt free is not going to be easy, but with the right advice & help it is surely possible.

By: Charlie Jones Jr.