http://www.pnwaug.org Thu, 10 Mar 2011 15:01:52 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 http://www.pnwaug.org/how-to-avoid-bankruptcy-get-out-of-debt-faster-using-debt-negotiation http://www.pnwaug.org/how-to-avoid-bankruptcy-get-out-of-debt-faster-using-debt-negotiation#comments Wed, 23 Jun 2010 08:31:57 +0000 admin http://www.pnwaug.org/how-to-avoid-bankruptcy-get-out-of-debt-faster-using-debt-negotiation

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

]]> http://www.pnwaug.org/how-to-avoid-bankruptcy-get-out-of-debt-faster-using-debt-negotiation/feed 0 http://www.pnwaug.org/bring-yourself-out-of-debt-with-a-debt-settlement-program http://www.pnwaug.org/bring-yourself-out-of-debt-with-a-debt-settlement-program#comments Tue, 06 Apr 2010 21:38:50 +0000 admin http://www.pnwaug.org/bring-yourself-out-of-debt-with-a-debt-settlement-program

One of the most common financial difficulties that you can get into is credit card debt. Sometimes, it is easy to spend money you don’t have by using your credit card and ignoring your budget. Also, subtle minimum balance payment hikes sometimes happen, so that instead of paying just 2 percent of the principal outstanding, you are now required to pay twice that amount. One way to get out of credit card debt is through a debt settlement program.

There are other ways to handle debt such as filing for bankruptcy, using a Consumer Credit Counseling Service (CCCS), getting a Debt Consolidation loan or doing nothing (especially if unemployed and there are no assets for creditors to pursue). Each option has its pros and cons. The advantages and disadvantages of settling credit card debt are presented below:

A debt settlement program is essentially debt relief, with the outstanding balance reduced up to 40-60 percent, depending on how well you or the settlement company negotiates with creditors. This is better than filing for bankruptcy, which stays in your credit record for up to 10 years. It is also preferable to getting a loan and risking properties and assets being taken away.

Instead of paying multiple bills monthly, you just need to deposit a single monthly payment to a trust account. The accumulated amount is used to pay creditors after the negotiation. You don’t pay multiple debts at different rates, and you don’t have to deal with multiple creditors at the same time.

You could also negotiate for extra charges, which could further damage your credit rating, to be minimized, if not eliminated. A debt settlement program could also protect you from unfair collection practices and harassing collection calls. Also, you are less likely to be on the other end of a lawsuit from creditors.

The main drawback, however, is that, settlement cannot stop your credit score from slipping. Late payments or charge-offs and a “Settled” account status on your credit report can do further damage. For example, unless negotiated with creditors, the account status on your credit report will be “Settled” instead of “Paid in full”.

Another disadvantage is when negotiations take more than 18-24 months. The chances of accomplishing one’s settlement objectives become lesser the longer it takes to reach an agreement with creditors. Your credit card debt only increases, and in the end, bankruptcy might be the better option.

It is important to remember that settlement is not a permanent solution if you are constantly having problems managing your credit card. It is not even a credit card debt solution that will suit everyone. However, if you accept the potential drawbacks, then a debt settlement program could work for you.

By: Mitch Lowe

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