Posts Tagged ‘bankruptcy’

Credit card debt relief can be reduced through lower rates or negotiating for reduced balances. With reduced interest, you can pay off the principal quicker with the same monthly payment. The other approach is debt settlement, which eliminates part of your debt at the cost of your credit score.

1. Transfer Balances

Credit card companies are always offering introductory deals, such as 0% on transfers. Usually such offers last for several months, giving you the chance to make sizeable payments on your principal.

If you have several credit cards, choose to transfer the account with the smallest amount. Pay off that account, then take that card’s monthly payment and apply it to your next lowest balance. Soon you will be creating a snowball affect, swiftly lowering your debt. Make sure to close paid off accounts to raise your credit score and keep from adding to your debt.

2. Negotiate Lower Rates

Credit card companies are also willing to lower rates. You can try to do this on your own, but you will have more success with a debt management company. For a monthly fee, they will lower rates with credit card companies and handle your monthly payments.

Debt management plans can affect your credit temporarily if your creditors report delayed or reduced payments. This might prevent you from opening new accounts for a year or more. However, with such plans you can be out of short term debt in less than five years with a much better credit score.

3. Settle For Reduction In Debt

Debt settlement can be the most effective method to lower your credit card debt. A debt settlement company can settle your debt with creditors, often times for up to 50% of the original amount owed. Reducing your credit card debt will have long term benefits for you. Less credit means better rates when you do want to apply for financing, especially with a home or car purchase. No matter which option you choose, research companies carefully and compare their services and fees.To learn more about credit card debt relief, please visit Total Debt Relief.

Do you shuffle bills from month to month deciding which one needs to paid first? Is there unopened mail sitting on the counter? Has the checking account never been balanced? Are you always borrowing a few bucks from family and friends? Do you write checks but then forget to mail them? If any of these questions hit home for you then you need this information.
Until you have your debt under control there is very little you can do to increase your wealth. Wealth creation is a function of the way you think about money, what you do to allow it to flow, and how you speak about it. Here are some tips to start you in gaining control of your financial future.
1. Get Real ~ The first thing you must do is admit you have a problem. Getting real means actually looking at the bills, adding up the debt, and seeing just how bad, or good, your situation is.
2. Plug the Hole ~ After you know what’s real and what’s not, you need to plug the holes. Stop going further into debt by creating new debt. Remember, a dollar lost doesn’t just cost you that dollar, it also costs you what that dollar could earn if you still had it. We call this opportunity cost
3. Eliminate Unnecessary Items ~ Look for things you can live without and learn how to say no. Do you really need that magazine subscription or cable service? Remember the opportunity cost.
4. Plastic Surgery ~ Get rid of the cards that created this mess in the first place. This is often the hardest thing for most of us to do, but it will bring the greatest rewards.
5. Keep Records ~ Start keeping track of what you spend money on. Buy a small notebook and write down how much you spend and what you spend it on. Then transfer this to a spreadsheet so you can see exactly where the money goes each week and each month.
6. Debt is a Temporary Situation ~ Don’t look at your debt as a permanent thing. You can pay off each and every creditor and you can do it comfortably without depriving yourself. You can live a life of prosperity and abundance.
7. You Have More Than You Think ~ Don’t let the temporary condition of your debt cloud the many blessings that are in your life. Be thankful for your family, your job, your ability to work, and the many material things in your life.
8. Bankruptcy is Not an Option ~ Bankruptcy is just a delaying tactic. It will give you a little more time but it won’t get to the underlying cause of your debt. Sooner or later you will end up in the same position. Bankruptcy does nothing to alter your beliefs about money; it may leave you with a sense of shame and embarrassment, and it plagues your credit for 10 years.
9. Debit Cards ~ Once the credit cards are gone you should get a debit card to purchase things you know you can afford. By using a debit card you are restricted to the balance in your checking and savings accounts. It removes one more means of going into debt.
10. Make More Money ~ What can you do to bring more money into the household? A part-time job, a garage sale, consulting work? Use your imagination or get the family together and brainstorm. You will be surprised at the ideas that you will come up with.
11. Celebrate the End to Each Bill ~ Don’t suffer over your debt, celebrate its demise. You should reward yourself when each debt is paid off. Maybe it is a meal out or a day trip to the beach or a dinner party at home. Let your success be recognized.
12. Take Action ~ Make lists of actions you can take. Keep your spending record, look at the want ads, make a few extra calls each day, create mailing lists, change your hairstyle, wake up earlier, exercise, meditate, turn a hobby into a profession. Keep yourself in action and success is guaranteed.
13. Balance Your Checkbook ~ Know where you are every day. Make sure when you balance your checkbook that you don’t forget to add in all the things you spent cash on.
14. Get Support ~ Alone is how you got into this mess and chances are alone will be how you stay in it. Ask for help. Get a coach, hire a credit counselor, join Debtors Anonymous, or just share with a friend who will hold you to your word.
15. Keep It Simple ~ Don’t let yourself think you will never succeed. The letter from the creditor that came today is just one letter. You will not die if you open it and you will not die if you don’t pay them this month. Keep your focus on one thing at a time and pay your creditors off one at a time.
16. Have a Plan ~ If you are to succeed you will need a plan. One way to plan is to start paying off your creditors from the smallest balance debt first. Once you have paid it off, take the money you were putting onto that bill and add it to the next bill. This way you will accelerate your debt reduction.
17. Tell the Truth ~ Don’t lie to your creditors. Trust me: they have heard them all. Be straight with them and make requests of them. See if they would be willing to reduce your interest rate or set up a different payment plan.
18. Make Notes ~ When you talk with your creditors make notes about who you spoke with and what was discussed. Make sure you note the date and time of the call and any other pertinent facts. Keep your notes in a place they can be accessed easily should there be a question about the conversation in the future.
19. Consolidate ~ Consolidating your debts may help but be wary of what it might cost you. Can you afford the combined payment and can you keep yourself from taking on new debt?
20. Speak Success ~ Start being responsible for what you say and how you say it. Get the negatives out of your speech: “I have a lot of debt”, “I wish I had more money”, etc. Start speaking from abundance and prosperity: “I am debt-free”,”More money comes to me every day”, “I do wonderful work in a wonderful way”, “I give wonderful service for wonderful pay”.
21. Create a Pool ~ There are debt pooling agencies that will negotiate with your creditors and pay your monthly bills. You send them a single check each month. The cost of this service can be high, though. Make sure you check them out thoroughly before signing anything. A better approach might be to use one of the legitimate non-profit organizations in your area.
22. Know What You Want ~ Start to dream a little. What would you do, be, or have if money were no object? Get out a piece of paper and write down all the things you would like to be, have, or do, and start to feel what it would be like to get what you want.
23. Look For Opportunity ~ Be open for miracles and serendipity to appear in your life. When you open up your mind to what you want, don’t be surprised if it starts showing up. Be ready and willing to act on those opportunities.
24. Create Multiple Sources of Income ~ No one ever got rich working for someone else. Look for ways to add additional sources of income. Maybe it’s that book you have been meaning to write, a piece of rental property, or a great network marketing business. Keep your eyes and heart open to what that business might be.
25. Never Go Back ~ Commit to never go back to the debt trap again. Build that cash reserve, add to your investments, and develop multiple streams of income. Feel good about yourself and what you have accomplished and share your knowledge with others. You can be proud of yourself and your achievement.

Q. Will I be totally debt free when I’m done? Our program is focused on dealing with only unsecured debts (credit cards, medical bills, unsecured personal loans). We cannot help you with debt that is secured by collateral (such as mortgages or auto loans). After completing the program, however, the money that you are no longer paying towards your unsecured creditors can now be used to pay down secured debts, as well as to save for your financial future.

Q. Will I have to take out another loan to cover my current debts? No. Our debt reduction program is not a new loan. Some of our clients will use a “consolidation” loan in conjunction with FDR’s debt negotiation program, but most fund their settlements with a monthly payment into their settlement savings account over the program period. That being said, we do have a relationship with a lending company, and some clients who demonstrate a consistent pattern of saving their monthly draft amount on time may be eligible for a loan to pay off one or more of their settlements. Of course, this is never something that is required of any FDR client.

Q. How is the service fee paid, are they paid upfront? Our fees are not charged upfront – instead they are withdrawn from your new settlement account each month. Typically our fees are spread out over a period spanning 18-19 months. The fee is broken into a Retainer fee, that is paid out over the first 3 or 4 months, and then a Service fee that is paid out over the following 15 months. All fees are included in the one monthly savings amount that our account executives will quote to you.

Q. Should I put all of my credit cards in the program? If you have one card with a low balance that you can quickly pay down to zero, then you may hold onto it for emergencies. However the program will generally not work unless you enroll all of your high balance (greater than $500) credit card accounts. As you can imagine, it makes it difficult for us to negotiate with your creditors if they can see that you are negotiating on some accounts but not others.

Q. Who controls the bank account where I am saving funds for creditors? You do. The bank account is set up in your name and the money in the account is your money. The reason why we recommend keeping it in a new account that is separate from your existing bank accounts, is that in our experience, this separation dramatically increases (by a factor of 2-3 times!) the probability that you will succeed in FDR’s program. FDR’s fees are deducted from this account each month, according to the Agreement that you sign with us. But the accumulated savings in the account are owned by you.

Q. How does this affect my credit? If you do not make required minimum payments to your creditor you may be breaking the terms of your agreement with them and your actions will probably be reported to consumer reporting agencies as a late, delinquent, charged-off or past due balance. This is true whether or not you have enrolled in a Debt Settlement Plan. Depending upon the condition of your credit report at the time of enrollment, a Debt Settlement Plan may have an adverse effect on your credit report and credit score. Our goal is to get you out of debt for the lowest cost, in the shortest period of time without declaring bankruptcy. Once you are out of debt, we will be able to refer you to a reputable credit repair organization if you desire. Please note, Freedom Debt Relief is not a credit repair organization.

Q. Will I receive phone calls from collectors? There are federal and state laws designed to protect you from creditor harassment. However, the fact is that most of our clients experience some collection calls. FDR’s goal is to get your creditors to call us and not you when they want to ask for money, and we will work with you minimize any calls that get through to you. In addition, we will work with you to make sure violators of collection laws, including the Fair Debt Collection Practices Act (FDCPA) are appropriately handled.

Q. Will I owe taxes on my forgiven debt? The IRS considers a forgiven debt as taxable income, so at the end of the year, they will expect taxes to be paid on the settlement. The IRS, however, has a form (Form 982) available for certain hardship situations that may exempt you from this tax. Please contact a tax advisor to discuss this issue further.

Q. Do interest and late fees accrue on my accounts? If you let your accounts go delinquent, your creditors will continue to add interest and late fees onto your balances. Typically, your balance will increase until a settlement is reached. Keep in mind that the interest is going to accrue regardless of whether you make minimum payments or not. FDR’s goal is to negotiate substantial reductions to the balances on your accounts, even after the interest and late fees have accrued.

Q. Could I negotiate on my own? Yes you can. You can also do your own taxes and repair your own car, but most people choose to seek help. Most people prefer to leave these tasks to experienced people who earn their livelihood as specialists in those lines of work. Our team of debt negotiation specialists has only one job – negotiating reductions on our clients’ unsecured debts, each and every day of the week. Our knowledge and experience puts us in the best position to stand up to your creditors and fight for the best settlement possible. Together, FDR’s team of negotiation specialists are resolving approximately $10,000,000 of debt each month (and growing!).

Q. Do you begin negotiating with my creditors right away? Except when dealing with certain difficult creditors, we generally contact your creditors right away (typically within approximately 1-2 weeks of your joining our program) to let them know that we have Limited Power of Attorney and to request that future collection calls come to us and not you. The actual negotiation activity is typically very limited until you have saved up enough in your settlement account to make reasonable offers to your creditors. Most (but not all) creditors do not want to spend time negotiating an account unless they know there are funds available. The first settlement typically happens in month 6 to 9 of a client’s program (this varies greatly and depends on your monthly savings amount and the number of creditors you have enrolled in the program as well as the balance of each individual account). In some instances it may take more than 9 months before the first settlement is reached.

Q. Will my debts be sent to a law firm? Will this result in a lawsuit? Creditors do have the right to send debts to third party collection agencies and/or law firms in order to collect a debt. If this happens, we will continue to negotiate on your account and will treat the debt as a priority creditor (meaning we will try to resolve it first, before moving onto your other accounts). Based on our actual experience, it is a small percentage of cases on which lawsuits are actually filed. When this does happen, usually the purpose of the lawsuit is to force a settlement. We will continue to negotiate to settle the debt, although the settlement percentages are often higher than typical “non-legal” settlements. If a lawsuit is filed before you have saved up enough funds to negotiate a settlement, we will seek to resolve the account by putting it on a long term payment plan for 100% of the balance. Please note, we are not a law firm and cannot provide legal advice or legal representation.

Q. Do you guarantee that you settle all of my debts for a certain percentage? No. Every case is a negotiation, and there is no guarantee how the negotiations will wind up. Furthermore, the success of our negotiations is highly dependent on your ability to save a specified amount each and every month you are in the program.

Q. Will entering your program repair my credit? No. We are not a credit repair company, and our goal is not to repair your credit. Our goal is to negotiate settlements at less than face value on your unsecured debts.

Source: http://www.freedomdebtrelief.com/debtreduction.php

Debt reduction is becoming a necessity for most Americans. With today’s unstable economy, many U.S. citizens are facing financial crisis beyond their worst nightmare. Between unemployment and failure of Wall Street, many people are beginning to realize unnecessary debt is preventing them from achieving their financial goals.

Although debt reduction can appear to be an overwhelming task, several options exist to relieve financial burdens. The first step requires thorough examination of current finances. Once you obtain a clear picture of financial obligations it becomes easier to determine which type of debt elimination plan is best suited for your needs.

The most popular debt reduction plans include debt consolidation, debt settlement, budgeting, credit counseling and bankruptcy. Each requires a commitment to adhere to the principals of the chosen program.

Most debt reduction companies charge an upfront fee in addition to monthly payments. While hiring a debt management company to handle finances is tempting, careful consideration should be given before traveling down this path.

Unless you are drowning in debt there is no need to spend additional money to reduce debts. Good old fashioned budgeting is one of the least expensive ways to regain control of finances. The only requirement is to carefully examine your financial situation and develop a get-out-of-debt plan.

Numerous budgeting resources are available via the Internet. Local libraries are also a good source for locating credible debt elimination information. By taking time to create a household budget and sticking to a repayment plan, many debtors can reduce or eliminate debts in a relatively short period of time.

Credit counseling is another affordable option for reducing debt. Most credit counseling agencies charge a fee to help consumers overcome mounting debt. However, individuals who are unable to afford this service can seek out non-profit credit counselors. Non-profit agencies base fees using a sliding scale. In some cases, debtors can receive assistance at no charge. The U.S. Trustee Program provides a nationwide list of credit counseling agencies, as well as debt education providers.

The United States Trustee Program is managed by the Department of Justice. When consumers file for bankruptcy protection they must obtain credit counseling through an approved agency. Debtors considering bankruptcy should consider obtaining counseling through a U.S. Trustee approved agency. If debtors end up filing for bankruptcy protection, they will have met the credit counseling requirements set forth by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Many organizations offer debt reduction services. Sadly, many charge outlandish fees or engage in predatory lending practices. It is crucial to thoroughly research debt reduction companies prior to signing a contract.

Debt reduction can provide financial freedom. However, individuals need to realize it will require time and commitment to break free from the financial chains which bind them. Take time to become educated about debt reduction options. Determine which is best for your financial situation. Create a debt elimination plan and put it into action. Then enjoy the rewards as you watch debt evaporate.