Debt Answers

2010-09-15T17:16:00.000-07:00

If you are a consumer who is looking for debt relief or information on debt settlement companies, it is important to do a sufficient amount of research prior to selecting a company to work with. You may find helpful debt help information online at any number of websites or blogs dedicated to providing individuals with helpful resources pertaining to the subject.

Law Offices of Melissa Ferris

2010-04-15T07:27:00.001-07:00

Melissa Ferris became a lawyer in 1999, and in 2002 started her practice as a consumer debt collector. She belongs to The Florida Creditors Bar Association, as well as being a member of

NARCA, or the National Association of Retail Credit Attorneys. Essentially the Law Offices of Melissa Ferris are debt collectors and must follow all the practices and standards of collecting debt.

NARCA is an association built by legal collection lawyers to help aid other legal collection lawyers, though they to have classes set up for debtors to help find patterns for why debtors get into debt. Legal collections is also a misleading term, is simply means collections attempted by a lawyer, mostly ending in a law suit.

The Law Offices of Melissa Ferris specialize in mostly retail debt and consumer debt. They work on a contingency payment basis, meaning they only get paid if they win. They are centered in Orlando, Florida, and can legally practice throughout all of Florida.

There are a couple of differences between legal collections and traditional collections. Most of the time legal collections are done on contingency basis. This means that law offices such as the Law Offices of Melissa Ferris usually only get paid if they win. Another difference is that usually legal collections are more aggressive, and more effective, as most people don't understand what their rights are, or do not even bother showing up to the summons.

It turns out most of these kinds of cases can be easily defensible,despite there aggressive stance. There is a statute of limitations on debts, and if they are resorting to legal collections it means that the debtor is nearing the end of the statute of when debt can be reasonably and legally collected. This aids debtors in their defense if the debtor has shown any actions to indicate payments attempted, or if the debtor “falls off the grid”.

As many debts come to the end of there statute of limitations, collectors and businesses will usually employ legal collections on the debtor, they are usually aggressive and usually try to use courts to compel payment, however most cases are easily defensible and easy to fight given the debtor wants to, especially if that debtor has shown attempts to pay off the debt. The best way to counter this measure is to hire a lawyer, most lawyers can use legal powers to stop the harassment of legal collections attorneys.

First Select Corporation

2010-04-15T07:26:00.001-07:00

First Select Corporation is a wholly owned subsidiary of Providian Financial Corporation. First Select Corporation was established in 1998 as a means to support the efforts of the Providian Group and it quickly became a large profit center for the company.

The Providian Financial Group was at one time one of the largest issuers of credit cards in America. The company put most of its focus on the low income group, awarding them credit at extremely high interest rates. Providian Financial came under fire in the late 1990s with a series of class action law suits charging that the company used overly aggressive sales tactics to persuade its customers to accept credit and then disguised the terms and conditions of the interest payments and payment schedules.

The First Select Corporation was established to buy up the distressed debt from Providian National Bank at a percentage of what the debt was worth. First Select then took steps to collect on these debts through their call centers. Each First Select call center employee was supposed to aim for finding a “right-party connect” or establishing that the person on the other end of the line was the owner of the debt. The next step was to extract a “promise to pay” or at least a “promise to pay in part”.

By following these simple guidelines First Select Corporation managed to secure over $1 billion in contract within one year of operation. This was a huge milestone and it was appropriately celebrated by the parent company.

First Select Corporation was also proud of its operations. It saw its role as providing value to both sides of the equation. First Select Corporation’s first president Roger Van Duinen is quoted in October 1999 as saying “Our goal is to bring value both to the financial institutions from whom we purchased the accounts and to our newly acquired customers by helping them to rebuild their financial strength.”

However, if the numerous forum complaints on wrongful credit report filings and bad service are anything to go by, the company has not managed to uphold its promise to bring value to clients. There are countless posts from puzzled customers who claim that First Select had contacted them about an overdue account but they could not get in touch with the company to respond to the claims.

The dealings of Providian National Bank were taken over by Washington Mutual in 2005, but there seems to be no contact information available for its subsidiary First Select Corporation.

Asta Funding Inc.

2010-04-15T07:25:00.000-07:00

From Englewood Cliffs NJ Asta Funding Inc., has been publicly traded company since 1995 and has been in business for over 40 years. According to the Federal Trade Commission (FTC) it is one of the nine largest debt collection agencies that collect around 75% of the purchased and traded debt in the US. It generates its’ revenues by buying, selling, servicing unpaid credit card and consumer loans. They boast a net worth of $100 million and offer expertise in the purchase of any size of debt portfolio. They have purchased over $10 billion in receivable balances. They mostly deal with unpaid credit card debts such as MasterCard, Visa and other private label credit card accounts but also consider consumer loans.

They buy delinquent accounts directly from credit granting companies as well as through indirect means such as auctions and brokers. According to the Better Business Bureau (BBB) ASTA Funding has a BBB rating of B-. With a rating level between A+ (the best rating) and F (the lowest or worst) a score B- is considered to be in the OK range. The BBB website gives the reason for this rating as it “does not have sufficient background information on this business”. According to the BBB there have been 4 complaints regarding ASTA Funding, all of which have been resolved.

Also operating as Palisades Collection Agency the company is not without its problems. Recent reports on ComplaintsBoard.com shows that one consumer had, after 5 years of reporting a debt as paid and removing it from the account, started to report it unpaid and tried to collect on it, again. Other posts conclude that consumers have been subject to similar instances of previously paid items being mysteriously reported as unpaid.

One irate consumer thinks that the company is going on a “fishing expedition” hoping to find people who have poor records or who are unwilling to question the debt. These consumers will often pay up and line the pockets of the collection agency.

As with most collection agencies, Asta Funding Company buys bad debt for pennies on the dollar from companies who have already tried and failed to collect money from their customers. The collections agency then pursue for repayment on the debts. When companies are not successful with the collections, they often resell it to a new buyer. Some debts can be bought and sold several times over a period of years to different collection agencies in an effort to collect. This is why there are, sometimes, several agencies contacting consumers for their debt.

Hardship Programs for Credit Cards

2010-04-05T15:37:00.001-07:00

Credit card hardship programs are yet another alternative to the many types of programs available to assist consumers who find themselves in over their head with debt associated with the use of credit cards. Credit card hardship programs are one of the many options out there that can get you back on the right credit track.

Take the First Step

Deciding to look into a credit card hardship program is a logical first step to stopping debt from getting too far out of control. Interestingly enough, a hardship program can offer an immediate solution to managing debt. Many people either do not know it exits or do not take this step soon enough to allow it to work in their favor. A hardship program will allow the borrower to work directly with the lender to negotiate a payment plan to reduce interest rates, and pay down an outstanding credit card balance.

Credit card hardship programs are typically offered directly through the credit card company. When you are at the point where paying making the minmimum payment on your credit card has become difficult the worst thing to do is stop paying it altogether. This will lead to a financial nightmare. Avoiding payment will lead to more fees, higher finance charges and a damaged credit score.

Other Options

There may be a few stipulations that come with any hardship program. You have to make the call to find out if you qualify. The rules and agreements may differ depending on the credit card company. It is not uncommon that those who inquire about the hardship program have to have a credit card payment that is more than 60 days late to qualify for a hardship program. One simple phone call to your credit card lender will let you know if the hardship program is a step you can take to reduce debt. If the hardship option is not right for you there are other alternatives.

Debt management
Financial counseling
Budget planning
Debt consolidation
Debt settlement

Any and all alternatives to properly manage debt are viable choices. The goal of any good debt relief program is goal is always to avoid bankruptcy, do as little damage as possible to your credit score and to reduce debt in the quickest most affordable way possible. Hardship programs can offer a simple quick solution and can be very effective especially for those with only small amounts of debt. Other more intensive financial programs may be more beneficial for those with higher amounts of debt.

Government Debt Consolidation Services

2010-04-05T15:36:00.001-07:00

Government Debt Consolidation Services

Debt consolidation is the process of tumbling several different loans into one convenient payment. The US Government has endorsed debt consolidation as a good alternative to bankruptcy because taking this step can help many people regain control of their finances.

A debt consolidation loan is most effective when it exchanges high interest debt, such as credit card payments for lower interest payment arrangements. Of course, this is not done by magic so there is an element of risk that is introduced to account for accessing the lower rate of interest. Most consolidated loan payments achieve the lower interest rates by turning previously unsecured loans into secured ones i.e. backed by your house or even car. This means that you place your property on the line for getting a lower rate of interest under consolidation terms.

Despite the added risk, consolidating is one of the few options left to those with unmanageable levels of debt. Although there are several private companies that offer debt consolidation services, government debt consolidation programs often offer rates and terms that are more attractive than those available on the open market. One of the most popular programs is the Federal Government Student Loan Consolidation Program.

Typically, there are five ways to repay your debts under this program;

Standard Repayment; Payments are fixed and can be spread over a maximum of 10 years, so this plan has the highest monthly installment.

Extended Repayment; Payments here are also fixed but the repayment period can be stretched from 12 years to as long as 30 years, however this means you end up paying more interest.

Graduated Repayment; This takes into consideration that your income will increase over time, so it offers lower monthly payments for the first 2 to 5 years and then increases the monthly installments after this period.

Contingent Repayment; Payments can be made over a maximum term of 25 years and the monthly installment is contingent on your income and the size of your loan. There is a fixed rate over the length of the loan and it cannot be more than 8.25%.

Income Based Repayment; From July 1, 2009 this option was made available. Under the terms of this plan, the monthly installments are calculated as 15% of your discretionary income. Discretionary income is calculated at anything that is 150% above the poverty line. This means that if you are not making any income you can stall your payments until you get back on your feet. This offers real peace of mind for many people.

Government Programs for Debt Reduction

2010-03-23T16:02:00.000-07:00

There is a common misconception that the federal government sponsors debt elimination, reduction or consolidation programs to relieve individual consumers of personal debt. While there are countless companies that provide debt relief in many forms, the government is not personally involved with these services.

The Misconception

The use of the word government or federal in advertisements for debt reduction programs is becoming increasingly common in the debt relief industry. The use of these words is a form of advertising. Advertising is used to entice consumers into using one service over another. When people hear of government involvement, they often think that companies are legitimate.

What Government Debt Reduction is Not

Government debt reduction is not a social program like public assistance or social security. You cannot apply or qualify for government debt relief assistance. It is not a fee for service company that provides debt relief assistance for a government does not offer programs that specially provide debt relief services.

What the Government Debt Reduction Is

Government debt reduction programs although termed as relief programs, are not the same as traditional forms of debt relief options. It is true that the government does provide assistance that can be used for debt reduction. The government does offer assistance with education, housing, taxes and other incentives that may indirectly decrease personal debt by providing relief in other areas.

The government offers certain forms of assistance for individuals struggling with debt in the following ways:

Government grants that can be applied for and granted based on availability and qualification.
Stimulus programs
Tax deductions
Federal and State incentives. These are typically for
Personal loans
Bankruptcy options

The Truth about Advertising

Advertising is the most common method for people or businesses to inform the public of their services. Debt reduction services are becoming very necessary and very popular given the statistics debt. The market for these types of services has seen a great increase in the last few years. Consumers are looking for a way to relieve themselves of debt that is pushing them closer to bankruptcy. Advertising is the way that debt reduction companies get customers to purchase their services.

A marketing tactic is the way that companies get results from their advertisements. Anyone can use any word they want to describe their services. Many debt relief companies describe themselves as The Best, The Most Effective or the Top Rated. These are simply descriptive statements. A description does not necessarily guarantee that everyone views the company in the way they are using to describe themselves in their advertisement.

Searching in the phone book or online can produce hundreds even thousands of results for government debt assistance. Taking a closer look into the specific advertisements will show that they are not government funded but rather companies that provide services for payment. The ad simply uses the word government in their advertisement.

Individuals looking for relief from debt should be aware of what is real and what is not in terms of services and options for effective debt relief. Although the government can provide needed assistance with debt relief it is often very different from the debt relief services that tailor very specifically to consumer debt.

Consumer Debt Initiative Scam

2010-03-23T16:01:00.000-07:00

Consumer Debt Initiative or Consumer Debt Relief Initiative is a debt negotiation and credit-debt consolidation company. The information that is available on their website is outdated. It states that consumers may be able to modify their mortgage payments because of several new programs that will expire December of 2008 along with an explanation of the HR 5140 Economic Stimulus Act of 2008.

According to the Better Business Bureau (BBB), Consumer Debt Initiative is also known as Consumer Debt Relief Initiative, Federal Debt Reduction Initiative, and Federal Debt Relief Program. Their address is P.O. Box 96503, #10680, Washington DC 20090, and their complaint contact is Mr. Andres Miller. They have the following additional addresses:

P.O. Box 96503, #182080, Washington, DC 20090,

P.O. Box 96503, #21555, Washington, DC 20090,

1711 M Street, N.W., #221, Washington, DC 20036,

and the following phone numbers:

(866) 721-1890, 3769

(888) 650-2848,

(888) 783-3417,

(888) 800-0515.

The Better Business Bureau rates businesses from A+ to F and has given Consumer Debt Initiative or National Debt Relief Initiative an F rating. The Better Business Bureau explains that the reasons for this rating are:

General concerns that they have with this industry, Unable to determine when this company actually began operation,
Not enough background information on this business,
The company has not responded to complaints filed against them.

Consumers have contacted the BBB because Consumer Debt Relief contacted them asking for personal information such as bank accounts and social security numbers. The BBB advises against giving out any information to companies that contact you unsolicited.

The BBB opened a file on Consumer Debt Relief on April 2, 2009, but they are unsure when the company actually began operation. This company has had two complaints filed against them in the last year: one for selling practices and one for advertising problems. They have failed to respond to both complaints.

The company’s website has what looks like a government seal on it, falsely giving the impression that they are affiliated with the U.S. government. They also state through a new “initiative” consumer may be eligible to modify existing mortgages. They reference the HR 5140 Economic Stimulus Act and include a link to a site called govtrack.us. However, the govtrack.us website urges consumers to contact their lenders and has a disclaimer denying any connection to places that are contacting people with a link to their website.

It is difficult to find too much information on this company because it appears that they change names quite frequently. They may have many satisfied customers, but there are no posts available making such claims. There are several postings on Internet complaint boards regarding Consumer Debt posing as a government agency and trying to pressure them into signing up before the alleged deadline, as well as their immediate requests for personal information. The Fair Debt Collection Practices Act (FDCPA) prohibits collection companies from falsely claiming to be associated with the government.

Top Debt Consolidation Companies

2010-03-17T15:14:00.002-07:00

If you are facing a personal financial crisis and looking for ways to keep your head above water, debt consolidation could be one of your options. Many credit counselors or debt management companies offer debt consolidation, but what exactly is it? Debt consolidation is when you combine your debt so that you are making one payment instead of several. The advantages are that you can often lower your monthly payments, and thereby hopefully prevent any further damage to your credit and get your finances back on track. Unfortunately, this industry has its share of scam artists and bad debt management companies, so how do you go about finding one of the top debt consolidation companies to help you out of debt?

What Makes a Top Credit Consolidation Company?

A top credit consolidation company will have well-trained and certified counselors that will help you regardless of age, religion, race, etc. The company should be a non-profit organization that does not force clients to pay high fees up-front or make large “donations” to their company. A good credit consolidation company will take time to fully review your financial situation, try to help you figure out where you went astray, and teach you how to avoid making the same mistakes in the future. Reputable counselors who are knowledgeable in the areas of consumer credit, debt and money management work with you to develop a debt management plan which you can reasonably afford to reduce your debt and get you back on track financially.

What is Their Better Business Bureau Rating?

Another place to look when trying to find a good credit consolidation company is the Better Business Bureau. The Better Business Bureau (BBB) evaluates and rates businesses based on several factors. They investigate how long the company has been in this industry, if there are any problems with the company’s advertising, the number of complaints filed against the business and whether and how the complaints have been resolved.

What is Posted on The Internet Complaint Boards?

It is also helpful to search on the Internet to see if there are many, if any, complaints posted on any boards about the company that you plan use. While the Internet complaint boards are not official sites, and an objective third party has not investigated the complaints posted, it can give you an idea of what the company does or does not do for its customers.

Other Organizations to Check

Two organizations that can aid your search are the National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA). These two organizations have created an industry standard of professional conduct for credit management companies. They both require the credit management companies to adhere to their strict standards and requirements in order to be granted membership. Their standards include such things as the agency must be non-profit, and meet all licensing, registration, bonding, statutory requirements required by the state that they operate in, must be accredited by the Council of Accreditation (COA), must be properly educated and trained, and must be available to customers without discrimination. Both organizations have listings of their members in each state.

Finally, if you are able to get a credit consolidation loan that will help you lower your monthly payments; it is important not to forget what brought you to this point in the first place and avoid spending more money now that you have a little breathing room. With a little help from a top debt consolidation company, you can get your finances back in order and finally breathe a little easier again.

Top Debt Relief Programs

2010-03-17T15:14:00.001-07:00

Debt has become a way of life for many Americans. Debt occurs for a variety of reasons. Job loss or change, unplanned expenses or emergencies are common reasons why debt occurs. Overspending, mismanagement of money and excessive credit card use are other common reasons for mounting debt.

Regardless of the reasons when debt continues to pile up there are a few ways to remedy the problem before consulting with a debt relief company.

· Significant changes in spending habits.
· Cutting unnecessary costs.
· A second job or second income.
· Elimination of credit cards.

These may be good first step options however for some, these simple steps may not work fast enough or result in significant enough savings to put a dent in overall debt. Small amounts of debt may be resolved without the assistance of a specialized debt relief program.

Implemented one or more common methods of saving may be the answer for a small percentage of the population. Changing overall spending habits and planning for a future of responsible spending is always the best option for debt reduction. Americans have found much needed relief from the pain of debt through a credible debt relief program.

Depending on the magnitude of the debt, some may need assistance far beyond that of simply cutting up a credit card or eliminating the purchase of lunch at work. For many reducing debt without the assistance of a debt relief program is not possible. Some are simply in over their heads in terms of being able to manage debt without professional reliable assistance.

There are credible and effective debt relief programs out there. Millions of Americans are drowning in debt which has led to the rise of a market that specializes in debt relief assistance programs. Reviewing available options for reliable and reputable debt relief programs is the first step in gaining financial freedom.

The top debt relief programs should have a few basic components for a successful process of debt relief.
· A free credit report.
· A free analysis of your overall debt and a specific plan for reduction.
· Representation for you to negotiate fair and manageable payment plans to avoid bankruptcy.
· The elimination of excessive fees and charges that increase monthly payments.
· Significantly lower monthly payments on outstanding balances.

A top debt relief program can offer solutions through a specific financial management plan that is tailored specifically for the individual. They should be willing and able to work with you to negotiate your debts by saving you money, not damaging your future credit and most importantly, getting you further away from bankruptcy.

Top Debt Settlement Companies

2010-03-17T15:12:00.000-07:00

Once you have made the choice to become debt free, the next step is identifying the right company that can best assist you in the process. There are so many debt settlement companies in the United States that offer an array of services and programs to get consumers out of debt. The quality and reputation of the company should be the determining factor in choosing debt settlement services.

It is easy for debt settlement companies to promise services. A promise that is not backed by consumer testimonials and results is worthless. Good research should include client testimonials and solid examples of results that have come from using specific company’s services. Most importantly there should be a resolution process and contact information readily available should issues arise.

It is not enough to decide that you want to be debt free. The real work comes in deciding on and choosing the most reliable and available company to meet your needs and be there to immediately answer questions and resolve issues.

The term debt settlement encompasses a variety of options under the umbrella of these services. Debt settlement is not a one step process. Companies should offer a menu of services that can assist clients in both resolving debt and making better choices for the future. A few of these areas include but are not limited to the following:

· Debt settlement options.
· Financial management and education.
· Credit counseling.
· Debt consolidation options
Clients shopping for debt settlement services should look for the following details prior to making their choice in companies. The top debt settlement companies should be able to produce a few essential elements.
· Experience and history that can speak to a track record of recorded success.
· Positive reports from consumers.
· Accreditation and approval from reporting agencies such as the Better Business Bureau.
· A reputable portfolio and easy to access company profile.
· Upfront information about fees and charges for service.
· A list of services that are provided.
· Customer service accessibility.
· A responsibility statement that ensures that the company will stand behind its tactics and efforts to seek debt relief for the clients.

The top debt settlement companies are those that have a proven track record of success and reputable services. These companies not only have certain components that make them reputable but have a history of good service that can support with success stories their promise of quality. Avoiding bankruptcy should be the ultimate goal of any good debt settlement company.

Newton And Associates, Inc.

2010-03-08T12:30:00.001-08:00

Newton and Associates operates within the aviation industry. It has provided its clients with a broad range of consultancy services since it was established in 1990. The company has an extremely small staff of six persons. The president, Nancy Newton founded the company together with Senior Vice President, Frank Newton Jr. Esq.

The pair has several decades of experience in the aviation industry in the areas of legal, financial and general management issues surrounding airports. Soon after its inception, the couple quickly called upon the services of Frank Newton III, who has also managed to gather over fifteen years experience in the field. Two Senior Consultants and a Consultant were added to the staff as time went on and the Newton and Associates began to grow as a company.

Newton and Associates is a small company, but it handles tremendous responsibility with poise. It is a member of the Better Business Bureau (BBB) and it has managed to maintain an A+ rating since June 2000.

The company handles several different aspects of aviation consulting. It offers legal advice on land use planning, leases and contracts, airline and tenant negotiations as well as other legal issues. Airport management issues such as passenger facility charge applications and cargo development are also handled by the company’s small but diverse staff.

Newton and Associates though is probably most called upon to offer financial advice to airports and airline companies. The small team work together to provide cost benefit analysis, economic impact studies, rates and charges analysis, feasibility studies and financial management and consulting services to companies in the aviation industry that are either in or on the verge of trouble.

Newton and Associates is also qualified as a Disadvantaged Business Enterprise (DBE). This is a Federal financial assistance program that is run by the Department of Transport (DOT). The DOT DBE program assists small businesses that are owned (even on a 51% majority basis) by socially and economically disadvantaged individuals. To maintain funding, the company must comply to strict federal guidelines on personal wealth (not more than $750,000), company revenue (not to exceed $52.47 million) and must set out clear pre-approved company goals.

Over the years, Newton and Associates has become affiliated with several aviation associations, including the American Association of Airport Executives and the Airports Council International.

The combination of the company’s A+ rating from the BBB and the strict guidelines imposed by the Federal Government, which are closely monitored to ensure continued qualification, seem to suggest that all the actions of Newton and Associates are above board.

Nationwide Recovery Systems, Ltd.

2010-03-08T12:27:00.000-08:00

Nationwide Recovery Systems, Ltd. (NRS) is a debt recovery or collection company. According to their website, they are a “commercial, consumer, and healthcare” collection agency. Their contact information is 2304 Tarpley Road, Suite 134, Carrollton, TX 75006. The phone number is (800) 458-6357 or (972) 798-1020. The Better Business Bureau (BBB) lists the start date for this office as April 1979 and Mr. Chris Mathews, CEO is listed as the principal. Mr. Steve McWhorter VP/GM is listed as the customer contact. Nationwide Recovery Systems, Ltd. is also known as NRS, NRS& Associates, and Nationwide Recovery Systems. Additional phone numbers listed for them are as follows:

(972) 732-9300
(800) 352-6844
(972) 732-9311
(972) 732-9316
(800) 458-6357
(972) 233-1369
(214) 634-7435
(972) 233-0032

The BBB has an additional address listed for NRS at 501 Shelley Drive, Suite 300, Tyler, TX 75701-9553 with a phone number of (903) 593-0063. The NRS Tyler office began business in October 1997. Ms. Jonna Robison is registered as the principal, human resources manager, and customer contact.

Nationwide Recovery Systems, Ltd. is registered with the BBB as a company that “offers the collection of delinquent healthcare accounts and also collects bad debts and checks other than healthcare.” The BBB rates companies from A to F and has given Nationwide Recovery Systems’ Tyler Office an A+ rating.

The Better Business Bureau accredited Nationwide Recovery Systems, Ltd. January 1998. This means that they comply with the BBB’s accreditation regulations and attempt to resolve complaints filed against them. The BBB has only 3 complaints for the Tyler office that have been filed against the NRS in the last 36 months, and all three have been resolved. They are as follows:

1 for billing or collection issues
2 for customer service issues

Nationwide Recovery Systems’ Carollton office has also received an A+ rating from the BBB. This office has had 56 complaints have been filed against the Carollton office within the last 36 months for:

37 for billing or collection issues,
1 for contract issues
16 for customer service issues
2 for sales practice issues

A total of 15 were administratively closed and 41 were resolved.

There are several complaints posted on Internet complaint boards about NRS regarding poor business practices. Some posters allege that NRS called them often at work and were rude, harassed them with many calls a day, falsely accused people of owing debt they didn’t owe, and refused to send a debtor proof of their debt.

The Fair Debt Collection Practices Act (FDCPA) was created to help prevent collection agency abuses. The FDCPA guidelines prevent collections agencies from harassing debtors and annoying them with phone calls. In addition, the FDCPA requires collection agencies to send the debtor a “validation notice” after contacting the debtor to verify how much debt is owed and to whom the debt is owed.

Nationwide Recovery Systems, Ltd. has been in business for approximately 31 years, and in that time, they have only received 59 complaints, all of which have been resolved or closed.

National Asset Recovery Services, Inc.

2010-03-08T12:25:00.000-08:00

National Asset Recovery Services Inc. (NARS) is a major player in the Business Process Industry (BPO). NARS was founded in 1993 and established its headquarters in Saint Louis, Missouri however it has since expanded its operations into a multinational presence with offices in Cape Girardeau, Missouri, Jamaica and Panama.
Although NARS started out with a focus on providing support services for the financial services industry, it has leveraged this experience and branched off into three distinct business areas.

Default Services
Customer Care
Electronic Services
NARS Default Service

National Asset Recovery Services has continued to provide the type of services that was responsible for its early success. The company performs debt collection services from various sources including student loans, credit card debt, bad checks and even utilities bills and health and fitness defaults.

NARS Customer Care

This add-on service was a natural by-product of the company’s main responsibility of default collections. NARS operates call centers in all of its locations and is therefore able to provide several service options including but not limited to telemarketing, help desk operations, order processing and technical support.

NARS Electronic Services

The company has also extended its operations into the area of online support services. NARS is capable of providing application review services, data processing and even cataloging services, just to name a few.

National Asset Recovery Services seems to be on an aggressive growth path. Not only has the company extended its line of service offerings, but according to Inc.Magazine it has also experienced an astronomical revenue growth rate of 90.7% over a three year period from 2005 to 2008 compared to an industry benchmark of less than 20%. This measure clearly positions NARS as one of the clear industry leaders.

NARS Memberships

The company is a member of both the Mortgage Bankers Association (since 2004) and the Association of Credit and Collection Professionals. Both associations put forth ethical and professional codes of conduct which are used to govern their members. NARS continues to be a member in good standing with these bodies and therefore can be judged by the same high quality standards.

Working With National Asset Recovery Services

According to 2009 records, NARS has an average of 3200 employees spread over its four branches. The company however shows no signs of slowing down. Their website promotes the company as “a great place to work” and with full time employee benefits like “promotion from within, employer funded medical, opportunities for advancement and even monthly bonuses (for qualified positions)” NARS seems bent on retaining the staff they do hire.

National Asset Recovery Services has a steady foothold in a robust industry, so good things can be expected.

Heritage Debt Solutions

2010-02-04T08:52:00.000-08:00

Heritage Debt Solutions is a company founded by Rick D. Gravatt. Information about this company can be found at Heritage Debt Solutions where they list the main address as:

Heritage Debt Solutions

1202 Cambridge Court

Marion, Illinois 62959

On his website Gravatt offers for sale his book entitled Debt Settlement: A Personal Perspective. The book comes in hardcover or as an ebook. Gravatt also offers Internet credit counseling and credit repair instruction. Gravatt charges $9.99 for his ebook, $39.99 for his hardcover, and $59.99 for his counseling and credit repair instruction. He offers a free download of his book that consists of the first three pages of his ebook.

Heritage Debt Solutions does not appear to be registered as a corporation or limited liability company with the State of Illinois. In addition, the Better Business Bureau has no record or entry for Heritage Debt Solutions. They are also not mentioned on the list of Federal Trade Commission (FTC) approved credit counseling agencies.

According to Heritage Debt Solution’s website, Gravatt himself once owed $80,000 in credit card debt. He chose to deal with his creditors himself after investigating all of his options. His book is based on what he found from his research. He claims that he was able to negotiate $60,0000 worth of debt down to $25,000 by himself.

Gravatt claims to have researched all types of debt relief including credit counseling, bankruptcy, debt settlement, and debt consolidation and he is willing to pass on the knowledge that he learned for the price of his book or counseling.

According to the FTC, it is important to ask these questions when choosing a credit counseling organization:

What services are offered?

Is help offered to avoid these problems in the future?

How much does it cost?

What if the fees are more than can be afforded?

Are the counselors accredited or certified? What training and qualifications do they have?

How is client information kept secure and confidential?

How are the employees paid?

It is also important to note that if you are planning to file for bankruptcy, pre-bankruptcy credit counseling must take place, and you must file a certificate of completion before filing for bankruptcy. The FTC says, “Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates.” They also say that a typical session should run from 60 to 90 minutes and should be offered free of charge if the client cannot not pay.

Without personally reviewing the book it is impossible to determine if the information provided is worth the cost. It is important to remember that most consumers can learn all that is needed about the various forms of debt relief without paying anything simply by doing a bit of research.

Global Financial LLC

2010-01-25T14:59:00.001-08:00

Global Financial LLC is a Montana based company that makes up one part of a larger umbrella company called Global Financial Mortgage and Credit. The larger company is split down the middle and serves as two separate companies, Global Financial LLC on the one hand and Global Mortgage and Credit on the other.

The company was formed in 1987 and has retained its status as a private company since its establishment. Managing Member and Chief Financial Officer of Global Financial, Mr. Charlie Byrne has been with the company from inception and has therefore remained one of its key staff members.

Global Financial is in the business of purchasing debt from a variety of debt holders and essentially turning that debt into liquid business capital. The company will purchase debt that is both secured and unsecured. Although it started off buying loans and other debt instruments from the FDIC and the RTC, Global Financial eventually started going straight to the source to buy loans.

It now does business with a variety of companies including but not limited to real estate developers, automobile dealerships, financial institutions and even private individuals. Any company or individual that has in its possession a saleable credit note or loan can trade it in with Global Financial in exchange for cash upfront.

Why Would Businesses Deal With Global Financial?

The benefit of selling longer term debt or even shorter-term but high risk debt to Global Financial at an agreed price is the flexibility of getting money upfront. Global Financial purchases the debt instrument at a discounted price and in return accepts the risk of not collecting on the amount owed. They can therefore be looked at as risk specialist as well as financial professionals because they must first assess the probability of making good on the loan and then assign a price for the debt.

For instance, if an automobile deal has an outstanding note on a car that represents a value of $10,000, Global Financial has to appraise the risk of collecting the money and then apply a discount formula to the principal to account for the fact that the auto dealer will be getting a lump sum payment as opposed to smaller installment payments over time.

The auto dealer wins because they have an injection of capital to carry on with their main business of buying and selling cars and Global Financial also wins because they have added another debt to their portfolio that is worth more than the price that they paid out on it, providing that their collection techniques work.

Global Financial has over 20 years of industry experience under its belt so the chances are it will continue to make profitable debt purchasing decisions.

Debt Forgiveness Tax Implications

2010-01-19T12:34:00.001-08:00

With tax season just around the corner, there are many filers this year that could be in for a surprise. If you found yourself in debt over your head during the past year and entered into any kid of debt settlement or forgiveness program, you could be in for a shock when it is time to file your taxes. If you sold your home during a short sale, modified your mortgage, negotiated and canceled out credit card debt or entered into any other kind of debt forgiveness program you need to be aware of the debt forgiveness tax.

You may have thought that once you settled on an agreement to forgive a certain portion of your debt that you were now free and clear of that debt, but this is not necessarily true. If the forgiven amount was $600.00 or more, in the eyes of the IRS the settlement amount is considered income. Let’s take a look at how it works.

The IRS, when you enter into any kind of debt settlement program can tax the forgiven amount. The reason behind this is that when you borrowed the money you did not pay taxes on it. When the debt was forgiven, that dollar amount is now looked at as income that you have gained. As a result you will be paying more in taxes for the year and you might possibly even get bumped up into a higher tax bracket. For many people this could be financially devastating.

The lender that settled with is required to send you a 1099-C form for the year that you settled the debt. You will need to claim the income when you file your taxes, unless you qualify for an exemption.

In some cases debt cancelation is not taxable. If you filed for bankruptcy, were forgiven on a farm loan or settled on a non-recourse loan you may be exempt from paying taxes on the forgiven amount. College student loans that are forgiven for pursuing certain public interest occupations also qualify for an exemption. If any of these particular loan circumstances apply to you, there is a form called the 982 that you will need to file along with your tax return.

If you have not already, but are considering entering into a debt forgiveness program, there are some steps you can take to ensure you are not scrambling to pay a high tax bill when you file taxes next year. Claiming fewer exemptions on your current salary can be helpful. You can also start a savings account that you deposit money into weekly or monthly to save up to pay the higher tax bill.

Cutting Debt in Half

2009-12-16T12:32:00.000-08:00

Getting rid of 50% of your total debt might seem like an insurmountable task, especially if you are currently struggling with several payments, but there is a way to drastically reduce what you owe. In order to be successful, debt reduction has to be strategic and constant.

Take a look at the following tips for an example of how to cut your debt in half.

Organize Outstanding Balances

The first step must be to get an accurate picture of your debt situation. Often people who feel bogged down by debt have no idea exactly how much they owe because they have stopped looking at statements. They avoid keeping track of the numbers to stop feeling so overwhelmed. This is a big mistake, because if you don’t know how far in debt you are, it is impossible to devise a way out, whether it be on your own or with the help of a debt consolidation company.

Pull out all the statements with balances. This may include unpaid bills, overdrawn current accounts and credit card statements. Then make a list of all the balances starting with the amount with the highest interest and working your way down to those with no interest charges.

Take a Look at Your Budget

Now that you have itemized your debt, you need to go through your budget with a fine tooth comb. You will be looking for ways to reduce spending and divert the excess cash to debt payments.

If you don’t have a budget, now would be a good time to draft one. Simply write down your income on one side and on the other make a list of your expenses. Get your receipts from the last month together to help remember where the money was spent. You can now commit to curb all spending except absolute necessities.

Try Negotiating With Creditors

It couldn’t hurt to pick up the phone and call your creditors to try to negotiate better rates or lower minimum payments. Let them know that you are going through a difficult time but that you are committed to paying your loan or facility. You may be able to talk your way into a lower interest that can significantly hasten how fast you can deal with your debt.

Implement the Debt Snowball

You may have heard of the debt snowball before, but you might not know how to implement it to your own situation. It is actually a simple process.

Look at the list of your debt obligations that you prepared earlier. Try to find ways of transferring larger high interest balances to lower interest instruments. For instance, you may have a large balance on a high interest credit card and a smaller balance on a credit card with a low introductory rate. Transferring from the high to the low interest means you save immediately on the interest payments.

The next step is to allocate money to your different outstanding balances. This is where the snowballing comes in because your payment balances will start to come down like an avalanche. To do this, you keep paying the minimum payments on all credit cards and your bills. You apply the extra to the debt with the highest interest (on the top of the list) until it is paid off in full. Then you repeat the process month after month until you have brought your debt to a manageable level.

Cutting your debt in half is possible if you come up with a plan and stick to it until you achieve your goal.

Cavalry Portfolio Services

2009-12-11T14:08:00.001-08:00

Cavalry Portfolio Services, LLC is one of the many debt collection agencies located throughout the U.S. While its head office is located in Hawthorne, New York, it also has three further regional offices in Arizona, Oklahoma and Minnesota. Their key focus is on the collection of delinquent debt.

Cavalry does not own any financial products themselves, but instead they work with other companies to help them collect outstanding debt. In some cases, Cavalry acts as a collecting service for the company and in others, it buys the debt that is owed. Often, they work with credit card companies, banks and phone companies, including MBNA and Sprint.

When a debt is purchased, it is done by Cavalry Investments, LLC. Cavalry Investments is headquartered in the Hawthorne, New York office. Cavalry Portfolio Services acts purely as a collections service for Calvary Investments. Both Calvary Investments and Cavalry Portfolio Services are privately held firms.

According to the Cavalry website, they put a keen focus on treating all customers with professionalism and respect. They emphasize the amount of training all of their employees receive, both when they start and throughout their career with Cavalry. The goal of the company is to keep all of their debt resolution specialists as up to date as possible when it comes to debt collection regulations in the state where they work. While their website is professionally done, it gives very little information about the actual company. The About Us provides nothing about the actual company, and instead talks about their commitment to excellent customer service.

Unfortunately, this message of customer satisfaction through excellent customer service does not mesh with the large number of blogs, articles and comments that can be found by doing a simple search on the company’s name. It is hard to discredit the vast amount of negative information out there with so little information given by the company itself. Complaints against the company range from rude and impolite employees to the company sending harassing and negative letters to people who have either paid off their debt or had no debt in the first place. There are also a number of blog posts about negative marks placed on credit reports by Cavalry.

According to the Better Business Bureau, none of the four offices listed with Cavalry have an accreditation. The ratings for the offices range from no rating to an A for the Arizona regional office. For all four offices, the number of complaints has been noted and the fact that the company has been sending fraudulent collection letters to consumers has been listed on two of the reports by the Better Business Bureau.

Overall, it is hard to discredit the wealth of negative information about this company, so if you are contacted by them, tread wearily.

Debt Collection Summons

2009-11-17T15:57:00.000-08:00

A debt collection summons is usually the last trick in the bag. If you have received a summons, chances are you have previously received several reminder statements and payment notices that went unanswered. Understand that there are plenty of options to get credit card debt help if you have received a summons.

It can sometimes take up to six months of non-payment for a creditor to have a collection agency issue a summons. Unfortunately the arrival of this little piece of paper means your creditor is serious about extracting the amount owed. If you have received a summons, you may want to consider debt settlement if you cannot pay the balance off in full.

What is a Debt Collection Summons?

A debt collection summons is a legal notice issued on behalf of the creditor which gives details of where the transaction in question took place and the amount owed and demands the debtor answer within the time stipulated.

What are the Important Parts of the Summons?

Opening an official debt collection summons can feel like a blow to the stomach, especially if you have been avoiding the prior notices, but you should take this document seriously.

The very top of the summons states in plain English that you are not to throw it away because it is a court document. This is followed by some stern statements about the consequences of not appearing in court, which include placing a lien on your property and damage to your credit report.

Of course you should double check the name of the creditor and the amount to make sure the claim is valid. Assuming you do in fact owe the sum in question you should check where the claim is registered, because you will need to go there to speak to a clerk in order to make an appointment to go before a judge.

You should take note of the index number on the summons. This identifies your case in court. If you need copies of documents filed in your case you can give the clerk the index number and they will be provided for you.

You are usually given 20 days to respond to summons within your state of residency and up to 30 if the summons is issued out of state.

How To Handle Inaccurate Information On A Summons

You should always file an answer to a debt collection summons. The consequence of ignoring a summons, even if you believe it is a mistake, is a default judgment. This means that your non-appearance is taken as consent to pay the amount owed and possibly even their legal fees. This will be recorded on your credit report and may stay there for up to seven years.

It is much better to appear before the court and try to negotiate a payment plan. If you can prove that you are unable to make the payment in full it is best to walk in with some proof to that effect.

A debt collection summons does not have to be the end of the world, although it should serve as a good wake-up call. Debt management should be taken seriously because it can have very serious consequences when handled incorrectly.

Creditor Wage Garnishment

2009-11-17T15:53:00.000-08:00

If you owe credit card debt and a creditor threatens you with wage garnishment, you may be wondering what that means exactly. If you've fallen behind making payments to your creditors, they may take you to court and sue for a judgment that allows them to begin wage garnishment. Normally you would need to be about six months behind making payments in order for a creditor to take you to court. A wage garnishment allows the creditors can collect the money you owe them by taking a portion out of each of your paychecks. It's legal in most states, and used typically as a last resort by debt collectors. Usually, settling credit card debt or setting up a payment plan is easier for them.

Depending on the size of your debt, the creditor may take you to small claims court or civil court. If the creditor wins the lawsuit in court, they will obtain a “judgment”. The judgment gives the creditor more legal options for collecting the debt you owe them, including wage garnishment.

If the court grants the Writ of Garnishment, your employer will be sent papers and get notified by the sheriff to take a certain percentage of each of your paychecks to send to the creditor until the total amount owed has been paid off. The money is sent to the creditor before you even receive your pay for the pay period and you will receive whatever is left from each check after the creditor is paid.

Each of your paychecks is exempt from garnishment up to 30 times the federal minimum wage (around $150 per week). This is money that cannot be touched by garnishment. Other exempt sources of income include:

-Temporary Assistance for Needy Families and other cash welfare benefits
-Supplemental Security Income
-Unemployment Compensation
-Student loans
-Social Security
-Most pension and retirement benefits

Additionally, any savings you have that come from these exempt sources of income and can be proven to come from these exempt sources of income will also be excluded from wage garnishment.

Before your check is garnished, you will be given a withholding order that contains the address of the clerk's office where you can file an exemption from the wage garnishment. If you do this, you have the opportunity for a court hearing during which time you can show your living expenses, your previous attempts to pay the debt, and hopefully get a reduction in the amount of money the creditor intends to garnish.

If you owe money to the IRS, they do not need to sue you to begin wage garnishment. They're allowed to take all but $116 from each of your weekly paychecks, so the IRS is one creditor you never want to skip out on payments to!

How to Settle Your Credit Card Debt for Less

2009-11-13T08:01:00.000-08:00

If your credit card balance has a stranglehold on you, this may be a good time to call your credit card company to see if they are willing to negotiate. It is possible that you may be able to settle your credit card debt and save money. With the unemployment rate at 9.8% and a high credit card default rate; many companies are scrambling to try to collect as much outstanding debt owed them as possible.

Try to Negotiate a Lower Interest Rate

Credit card companies are racing to raise interest rates before a new law freezing rates takes effect. Higher interest rates make it difficult to pay down your principal and get out of debt, especially if you are only making minimum payments. Contact your credit card company to see if they are willing to lower your interest rate; let them know that you are shopping around for a lower rate. If you can show that you have been a good customer and always paid your balance on time in the past, they may be willing to lower your rate rather than lose you as a customer.

Transfer Your Balance to a Lower Interest Credit Card

There are still some credit card companies offering a 0% introductory interest rate. Take advantage of the offer and try to pay off as much of the principal as you can while you have the lower interest rate. If you have other cards with lower interest rates, consider transferring all of your balances to the lower rate credit card.

Try to Negotiate the Amount You Owe

In the past, negotiating a lower balance would have been impossible. Credit card companies write off a six-month past due account as a loss, so they are more willing to negotiate in hopes of recouping at least a portion of that balance. If your account is 30 days or more past due, many companies may be willing to accept 60%-70% of the outstanding debt. It is important to note that negotiating a lower balance will negatively affect your credit score, but at least you will be free of the debt. In addition, you may have to pay taxes on the amount that is forgiven.

Keep in mind that your first attempt to negotiate may not be successful, but don’t be afraid to try a second time. Many credit card companies have had the advantage of receiving bailout money from the government giving them a little more breathing room to negotiate with you. The hit that your credit score will take should not deter you from settling your outstanding credit card debt in order to save yourself years of headaches and heartaches that unpaid debt will bring.

Debt Help for Single Moms

2009-11-06T13:09:00.000-08:00

A single mom’s primary concern and main objective is to provide for her children. This is an even greater burden when she has no financial support from their father. It is an unfortunate fact that a majority of single mothers make significantly less income annually than men, single or married. Thankfully, there are many ways a single mom can obtain credit card debt help.

Credit Counseling Services

These services are available to assist in negotiating with creditors to reduce your debt. They also help you develop a budget according to your monthly bills and income, which is your roadmap to financial freedom. Even though credit counseling services are basically doing what most single moms no longer have the time to do, there are fees for these services.

Department of Social Services

Food stamps, medical and dental assistance are available through your local Department of Social Services. These services are free but you must apply and endure a qualification waiting period.

Public School Meals & After School Care Programs

These programs provide free breakfast and lunch for children and after school care for working single moms who can’t afford daycare.

Grants for Women/Single Moms
Though hard to obtain, there are grants available exclusively for women and single mothers. You must apply, qualify and be selected to receive a grant, but it doesn’t have to be repaid as a loan does. Loans may be necessary for your mortgage, vehicle, or college but they create additional debt so avoid applying for new ones. Since single moms seem to acquire more debt out of necessity, their credit scores are usually lower than the average married couple or single man. This is the main reason single moms have difficulty qualifying for loans, which is when the grants are so beneficial

Create a Budget

Several websites offer free budget forms and guidelines to make the process less painful. Budgets can be customized according to personal circumstances and special needs. Monthly budgets are developed according to an overview of all monthly outgoing income and debts owed. Weekly budgets are established based on payment due dates in accordance with paydays.

Utilizing the assistance offered through grants, public school programs, the Department of Social Services, and credit counseling services are just a few ways for single moms to get debt help. None of these options are overnight solutions but will definitely give single mothers an advantage over struggling alone with debt on a daily basis.

Help Paying Off My Debts

2009-11-02T15:38:00.000-08:00

You can rip the statements up. You can pretend you didn’t get them and leave them unopened. You can light them on fire in a big pile in the back yard, but they will still come back to haunt you. Unless you actively try to eliminate debt, it will keep knocking on your door, each time growing bigger and bigger.

If you have decided that its time to be free of the debt monster check out the following steps and soon you will remember what it was like to live without the shadow of debt lurking in the corner.

Make a List of Your Debt and Check it Twice
The first step is to organize all your debt obligations. Get together those statements that you’ve been avoiding and lay them out on the table. Next, you need to draw up a simple table. Your table should have the following columns:

• Company / Financial Institution
• Amount owed
• Interest Rate
• Payments Made
• Balance Outstanding

Of course, the fun part is to start filling in the columns with the information. You will only be working with the first three columns until you start paying down the debt.

Once this is done, you should come up with a color code system that works for you. Try creating different ranges for the interest rates. For instance, if you realize your interest rates are 8%, 10%, 12%, 15%, 23% and 29% you can categorize into three groups of rates less than or equal to 10%, less than or equal to 15% and over 15%.

Assign each interest rate category a color, maybe going from red for the highest rate, green for the mid-range and yellow for the lowest group. Highlight the rows according to the category. This will dictate the order in which you should focus on paying down the debt.

Find Ways to Channel Money into Debt

Even the tightest budget has some room to pay a little more than the minimum payment on debt obligations, even if this means taking out a loan at a lower interest rate to do it. The following list itemizes some ways to find that ‘extra’ cash to pay down debt.

• Take out a home equity loan. If you are able to tap into your home’s equity you can probably get access to some cash at a rate that is much lower than your highest debt category. Warning: this option turns unsecured debt into secured debt which should be considered before borrowing money to pay off existing debt.

• Borrow from friends and family. If you haven’t already tried this route it could be time to bite the bullet and ask for a loan from those around you. You should be careful that it is properly recorded and you can give a realistic idea of when you can repay it.

• Use up your savings. People are usually unwilling to let go of the safety net of their savings to pay down debt, but it really doesn’t make sense to hold on to a money market balance that might be earning 4% at the most, when you have debt outstanding at almost 30%!

• Borrow against your life insurance. This is essentially borrowing your own money, but then again, so is holding on to a savings account with an outstanding loan at the same institution. Borrowing against life insurance is normally a lot less expensive than taking a commercial loan.

Motivate yourself to Pay

Everyone is motivated in different ways, so you have to experiment a bit to find something that works for you. Do whatever it takes to keep you on your path toward debt free living. If you need to tape pictures of your children on the inside of your wallet to remind you not to spend unnecessarily… do it. Alternatively you could write a positive message on your bathroom mirror reminding you to chuck away more into debt payments or you can post up pictures of things you would like to do after you are free from monthly debt payments.

Paying off debt may seem extremely difficult if your approach is unstructured. If you develop an organized plan of making payments and you can actually see the balances going down, it becomes an emotionally rewarding experience.

Consolidating Credit Card Bills

2009-11-02T15:32:00.000-08:00

Once you’ve made the decision to consolidate your credit card bills, there are a few wise options to choose from. A credit card with a 0% interest rate for transferring your balances over to one card is one option; another option is securing a personal loan. With so many fees, and rising interest rates, it is wise to do some research before choosing your method of consolidating your credit card bills.

Taking out a personal loan is one common method for consolidating debt. Some providers, such as E-Loan.com, don’t even charge application fees. If your debt includes a mortgage, you will need to have an impound account established. The loan limit and interest rate will vary with lenders and may depend on your credit history. Some lenders will allow a loan up to $30,000 where others may lower the limit to only $15,000, so be sure to do some comparison shopping of lenders before applying with one. Either way, be sure to take out a loan for no more than your debt amount; this isn’t for blow-money.

A 0% interest rate card is a wise choice for transferring all your debts onto one card. With the current recession, there are only a few 0% choices, both from Discover. The Discover More card offers 0% annual percentage rate for twelve months with a 5% balance transfer fee. Discover More also has no annual fee.
The Escape card offers 0% interest rate for six months with a 3% balance transfer fee. Unfortunately, Escape does charge a $60 annual fee, along with other fees and charges.

By consolidating your debts into one, you will be saving not only by having one interest rate, but also just one account that can be charged fees. These changes will automatically begin to reduce your monthly debt. Either securing a personal loan for your debt amount or transferring all your credit card bills onto one card are good options. Neither will be an overnight solution but you will certainly increase your peace of mind. If you consistently make your payment on time, you will also quickly improve your credit rating.

Once you’ve paid off the debt, consider implementing a monthly budget to avoid accumulating future debt. There are many websites offering free budgeting tools. You can create a budget that’s customized according to your payday date and when your bills are due. Some of these websites offer monthly, weekly, and mini budget forms, financial counseling, money management workshops and more.

Ways to Avoid Filing Personal Bankruptcy

2009-10-27T13:55:00.000-07:00

Sell Assets

Selling your assets is one way to raise the money needed to pay your debts and avoid filing personal bankruptcy. If you can share a vehicle with your spouse or use public transportation to get to work or school, consider selling a vehicle to earn several thousand dollars that can be used to pay down your debts. Clothing, decorative items, jewelry and other items can be sold at flea markets, yard sales, garage sales and consignment shops to earn even more money. While parting with your possessions may seem too difficult to bear, using the money to pay your debt and avoid bankruptcy can help you to save your credit and make it easier for you to make large purchases in the future.

Debt Settlement

Debt settlements can be negotiated with some creditors so that you can settle your accounts without having to pay each debt in full. If you owe a creditor $1,000, you may be able to settle the debt by paying $600. Some creditors even allow you to make several payments on a settlement amount, making it easier to pay the debt and close the account. Do not use debt settlement for debts that are current and in good standing. Only use this technique with accounts that have been sent to a collection agency or charged off by a creditor.

Negotiate Terms

Try to negotiate better payment terms with your creditors so that you can avoid bankruptcy. If the interest rate on your credit card is too high, talk to a company representative about getting the rate reduced. If the minimum monthly payments on a purchase are draining your bank account, see if you can negotiate lower monthly payments. Explain to each creditor that you want to avoid bankruptcy and let them know you are willing to pay your debts if given the opportunity to do so. Ask a representative of each company about any financial hardship programs that may be in place. Negotiating better terms can save you hundreds or even thousands of dollars.

Develop a Budget

In order to avoid bankruptcy, you will have to come up with money to pay your debts. Developing a household budget is a good way to see where you can limit spending and use the extra money to pay down your debts. Write down every one of your monthly expenses, whether it is a necessity (rent, groceries, utility bills) or a luxury (newspaper subscription, cigarettes, salon services). Determine which expenses can be reduced or eliminated. For example, you can read your local newspaper online for free instead of paying for a delivery subscription. You can get your hair cut and colored for greatly reduced rates at a local cosmetology school instead of paying full price at your local salon. Use the money you save to pay down your debts.

Credit Card Consolidation Programs

2009-10-21T09:09:00.000-07:00

Are you looking for a way out of your credit card debt? If you are struggling to pay off multiple credit cards and getting nowhere, your solution could be to enter a credit card consolidation program.

Q: What exactly is a credit card consolidation program?

A: It is a debt-management strategy using the services of a third party to negotiate with your creditors on your behalf.

Q: Why consider a debt consolidation program when I could manage the debt myself?

A: If you had been managing your debt, you wouldn’t be reading this. You would have:
• a budget you followed religiously.
• a regular monthly payment plan to pay everything on time.
• no new credit cards.
And you would not be getting unexpected bills and demand notices.

Q: OK – point taken. So how can this help me?

A: A good program will give you access to experts who:
• negotiate with your creditors to work out a plan suitable to all parties.
• assist you to assess your situation so you are debt-free within a specified time (typically 2 to 5 years) depending on your debt.
• give you a structured approach to managing your debt – especially useful if you are a naturally disorganised person.

Q: What are the immediate benefits?

A: It depends on the particular program but these are typical benefits already being obtained by people in your situation:
• Reduced interest rates especially if you have a less than perfect credit rating.
• Some creditors may waive late fees.
• No stressful collection calls
• Your finances are structured around one monthly payment for better budgeting.
• May help you avoid bankruptcy.
• Debt free at end of the program

Q: Suppose I go down this road. What should I do next?

A: The main thing is to take action now – here are a couple of suggestions:
• Assess your situation immediately! There are a range of programs, so you need time to find the one that is your “best fit”.
• Contact the various providers to find out what they are offering.
• Don’t procrastinate – you won’t win the lottery!

And remember, there is no point in working hard to become debt-free if you do the same thing again. A good program will link you with a counsellor who will help you learn from your experience so you can change the habits and behaviours that created your situation.

Credit Card Settlement vs Debt Consolidation

2009-10-14T13:36:00.000-07:00

Credit card debt is a huge stress factor for many people. Eliminating that credit card debt owed is a big step in attaining financial freedom.

Two of the most popular ways people are eliminating the financial burden of credit card debt is by credit card settlements or debt consolidation.

Credit card settlements are one of the fastest and cost effective ways to eliminate credit card debt. It is often very effective for those with a large amount of credit card debt that they want to get rid of as soon as possible.

With credit card settlements you only have to pay off a portion of what you owe – not the whole balance. In general, most credit card companies will settle debt for 30 to 50 percent of what is owed but some will ask for 75 to 80 percent of what is owed. It is also very beneficial because when the debt is settled, you are able to avoid paying hundreds or sometimes thousands of dollars in interest payments.

Everyone can ask their credit card companies for a debt settlement. The decision is based on the credit card company’s policy on debt settlements and your personal financial situation. They will also often ask for income statements and other information on your bills.

Debt consolidation is often done by taking several different credit accounts and turning them into just one account at a lower interest rate. Consolidating debt can save hundreds or thousands of dollars in interest rate fees, but it doesn’t eliminate the debt. Besides the lower interest fees, the single account to have to pay off is often a large benefit to borrowers because they only have the one debt instead of many debts to pay each month.

Check with your bank or credit union about debt consolidation loans to consolidate your debt. Most will work with you in a favorable way since you already have an account with them. Internet searches may show up great rates but some are not realistic and may not have your best interests in mind. If going this route, make sure you do research before agreeing to anything.

The most important difference between credit card settlement and debt consolidation is that when you consolidate debt you still have to pay off all of your debt in full. With the credit card settlements you only end up paying a portion of what you owed.

Settling Debt in Collections

2009-09-29T06:53:00.000-07:00

Once a debt goes to a collection agency, it is a sign that your original creditor has given up on you ever paying that debt. Collection agencies are a little more optimistic. They are betting that they can collect at least a portion of the debt.

The collections agency often gets a percentage of the money they collect. That means the collections agency only makes money if they can collect from you before you file for bankruptcy. Given that something is better than nothing, collection agencies have a significant incentive to negotiate a settlement on debts in collections.

You may be able to negotiate a settlement that is as low as 50 percent of the debt owed. In general, the longer a debt has been in collections, the more likely it is that the collections agency will be willing to negotiate a settlement.

However, if the collections agency knows that you need to clear up the debt in order to buy a house or get some other loan, they will not have any incentive to negotiate and may not reduce the debt at all.

Therefore, you should not seem too eager to settle the debt. The collection agencies first offer of settlement can usually be improved upon. Making a counter-offer will usually get them to further reduce the settlement amount. Always ask collections agencies to drop any late penalties or accrued interest as part of your negotiations.

Be sure to also negotiate credit reporting as part of the settlement. In the best case scenario, you can get a collections agency to delete the debt from your credit report. This requires some effort on their part, so it may not always be easy to get a full deletion. If this is the case, make sure the debt is immediately marked as “Paid as agreed” on your credit report.

When talking to collection agencies by phone always take detailed notes, including the date and time of the call and the name and title of the person with whom you spoke. It is a good idea to have a fax available when you speak to the collections agent so that the settlement agreement can be signed by you and the agency immediately upon agreement. Alternatively, you could conduct all negotiations in writing.

Pay the settlement immediately. However, do not give the collection agency or any creditor a personal check. If you are having financial difficulty, you do not want any creditor to have access to your bank account information. If you use a money order or cashier’s check, do not get them from your home bank.

Does Filing Bankruptcy Hurt Your Credit?

2009-09-28T07:32:00.000-07:00

A bankruptcy filing will definitely hurt your credit for a significant period of time and should be thought of as the method of last resort when dealing with overwhelming debt problems. Filing bankruptcy will stay on your credit report for 10 years after the debts are discharged and will reduce the likelihood of getting credit. It could keep you from buying a house, getting life insurance or in some cases even getting a job.

However, for some people filing for bankruptcy is the only option when faced with a financial crisis. For someone drowning in debt due to a job loss, illness or other major setback, their credit rating can only get worse until they do something to stop it. Filing bankruptcy may be the only way out of a continually worsening situation.

There are two types of bankruptcy, Chapter 13 and Chapter 7. Chapter 13 lets people with a steady income keep property like their home and car. People filing Chapter 13 will make payments they can afford to the bankruptcy trustee for three to five years. The trustee pays the creditors and at the end of the scheduled payment plan, the debts are discharged.

In a Chapter 7, all debts are discharged immediately, but the debtor is only allowed to keep a few exempt assets. All other assets are sold and monies are dispersed to creditors right away.

In either Chapter filing, once the debts are discharged, they can no longer continue to damage your credit report. The bankruptcy itself will be a large negative mark on the credit report. However, from the moment the debts are discharge, your report can only get better.

Pre-discharge counseling is required by the bankruptcy court and will give debtors a better idea of how to build their credit back up the right way and avoid any future financial crisis due to bad debt management.

For those in financial crisis, bankruptcy can give them a clean slate. Their credit rating may drop, but they can build it back up on a solid foundation with smart debt management.

If you are responsible, you can re-establish your credit score over the 10-year period. Use credit only to improve your rating, and never as a means to live above your means. Once the bankruptcy drops from your credit report after that time period is up, you could have an excellent credit rating.

What is a Debt Relief Agency?

2009-09-21T15:59:00.000-07:00

A debt relief agency can help you eliminate your debt with a debt management program. They will negotiate the payments and interest that you pay with your creditors. You will pay one monthly payment to the agency, and they will disperse the funds to your creditors. They do charge fees for their services, so make sure to get the details with your credit counselor. They can help you avoid filing for bankruptcy, which will ruin your credit for a long time. They will also help to eliminate the telephone calls you receive from debt collectors, as long as you make your payments on time. Debt relief agencies can prove to be a good source of credit card debt assistance for many.

How do I find a debt relief agency?

You can check the yellow pages or Google for some debt relief agencies. You can apply and request a quote online with many agencies. There are so many debt relief agencies to choose from, so take the time to shop around for an agency that suits your needs.

Why should I use a debt relief agency?

Credit cards charge a lot of money in interest and late fees, so you will save money with a debt relief agency. You will be able to consolidate all your debt into one monthly payment. You will have an easier time paying your bills, and your monthly payment will be lower. You can relieve the stress and burden of your debt with a debt relief agency, and be free from debt in a short amount of time. Additionally, you will be able to raise your FICO score by eliminating your debt. You can then focus on saving money for your future. If you have been struggling with your debt for a long time, then a debt relief agency might be the best option for you.

What else should I be aware of?

You will not be able to use your credit cards with many of these debt relief agencies. The goal is for you to be completely free from debt in a few years. These agencies want you to be successful, so they do not want you to get further into debt, while you are using their services. They might require that you close your credit card accounts before joining the program.

Many of these companies will provide you with credit counseling, so take advantage of it. They can help you create a budget and they will address any concerns that you have. They might require that you complete a course in order to educate you about your finances, and how to be responsible with your bills.

Filing Bankruptcy on Medical Bills

2009-09-16T15:28:00.000-07:00

When most people think of bankruptcy, credit card debt and mortgage foreclosures are likely what come to mind. However, recent studies show that more than 60% of bankruptcy filings are related to medical bills and not all of the individuals racked with outstanding medical bills are uninsured. Even those who have good health insurance have outstanding balances for procedures and care not being covered by insurance.

Avoiding Bankruptcy

Financial experts recommend that consumers use bankruptcy only as the very last resort to get out from under debt. The process of filing bankruptcy is not an easy one. There are high expenses involved and the process is very time-intensive to the consumer. Additionally, bankruptcy is not a sure thing. Many creditors in a bankruptcy filing will not agree to discharge all debts. Consumers are urged to seek alternative solutions when it comes to medical debts.

What to Do If Medical Bills Are Due

Review Your Bills

It is not uncommon for patients to discover billing errors from a hospital stay or medical procedures. If you are not reviewing your billing statements closely, you may find that mistakes on the part of the medical care provider can total hundreds or thousands of dollars in your favor. Providers should make itemized statements available for your review. Pay attention to what tests and procedures you are having completed and discuss with the healthcare provider at the time of the treatment what is being done and how much it will cost. If, after you have reviewed each item on your bill and you have questions or concerns, contact the billing office immediately to get the matter cleared. Even if you are behind on payments currently, you still have time to go over your billing statements if you haven't done so before.

Make Payment Plans Through the Provider

Medical bills can cause larger problems if you choose to pay for them with a credit card or through a personal loan. Never use a home equity loan to cover medical bills because defaulting on this type of loan can result in your losing your home. If you are unable to make the payment in full, speak with your healthcare provider and make reasonable payment arrangements you can commit to each month until the debt is paid off. The majority of providers will work with you until the debt is paid off. If you ignore requests for payments or fail to make reasonable efforts to pay on the debts, the provider may send your account to a collection agent, which can result in various collection efforts and potentially harassing correspondence.

Seek Health Insurance

Many medical bills become a debt problem because a person is uninsured or under-insured. If you find it difficult to keep up with medical expenses, you will need to ensure that you have proper insurance coverage. During times of debt, it may seem as if you can not afford health coverage, but as history clearly shows, you can't afford to not have good and adequate health insurance coverage. If you are not covered by insurance due to job loss or other financial hardships, there are several federal and state programs that consumers may be eligible to receive. If you do not qualify for these programs, then you may need to re-work your budget to be able to include insurance coverage.

How Bankruptcy Works

2009-09-09T13:16:00.000-07:00

A few years ago changes to the bankruptcy law made the process less likely to be abused. This may have reduced the number of people who fraudulently racked up debt with no intention of repaying their debts; however, people who suffer a legitimate financial hardship now pay the price. Filing for bankruptcy carries with it a social stigma that can last for many years after your debt is forgiven and there is no such thing as a fresh start. You may be absolved or repay your debt but the damage to your credit and lasting presence on your credit report are very serious consequences that should be considered. Nevertheless, if you find yourself in a position where all other methods of repaying debt are not an option, it is a legal way to deal with your financial problems. Before moving forward you should first understand how bankruptcy works.

What Happens When You File Bankruptcy?

Once you have contacted a bankruptcy attorney and you have decided this is the route you are going to take you can expect the following things to happen.

• Creditor activity stops- An order for relief is automatically issued once your petition is recorded in bankruptcy court. This means that calls, letters, wage garnishments, foreclosures and repossessions are prohibited for that point forward. This will provide immediate relief from the stress of constantly trying to fend off debt collectors.
• Case is administered- Basically depending on what type of bankruptcy you have filed the next step in the process is either liquidating non-exempt assets or establishing a repayment plan. Chapter 7 bankruptcy absolves you of your debt but not without first selling certain assets for the purpose of distribution to your creditors. This type of bankruptcy is considered less favorable than Chapter 13 bankruptcy in which you work with your creditors to repay your debt over a certain period of time. This reorganization of your financial situation shows current future lenders that you are at least willing to try to meet your end of the financial contract.
• Impacts to credit- There is no avoiding the fact that filing for bankruptcy is the worst thing you can do to your credit. It will remain on your credit report from 7-10 years although you should be able to see signs of recover in that time. Some lenders will actually consider you less of a risk immediately after you file for bankruptcy as you are currently free of debt and unable to file again for several years.

There are many things to consider before filing for bankruptcy and the pros and cons should be weighed carefully. Whenever possible it is recommended you avoid this type of debt elimination, however that is not always possible. If you are forced to file for bankruptcy do not let the lesson go unlearned. Find out what caused your financial problems and take the steps necessary to avoid ever needing to file for bankruptcy again.

Help With Bad Credit

2009-09-03T08:26:00.000-07:00

Caveat emptor when seeking out help with your bad credit rating. Latin for “buyer beware”, caveat emptor is an important piece of advice to remember when it comes to dealing with bad credit and debt problems. While there are many agencies that can help advise you about restoring your bad credit, and claim to help with bad credit, there are many other companies that are only interesting in getting your hard-earned money and do nothing to help you with your credit problems.

What Kind of Legitimate Help Is Out There?

Licensed credit counseling services are available, usually at a low or no fee, to help you analyze your credit report and see what can be repaired. Counselors who are legitimately trained to help you manage your finances and understand your credit do provide invaluable services to their clients. Since good credit is an essential part of a healthy financial life, it is imperative that consumers, who have credit problems, make an effort to restore their credit score. These legitimate services can help educate consumers as to how to take care of their own credit situations and what to do to make the necessary improvements.

How Bad Help Can Hurt

Seizing an opportunity to capitalize on consumers struggles with finances, there are less-than-reputable people who set up companies and advertise that they can repair your credit report seemingly overnight. There are essentially two ways these companies set out to accomplish this task – either they perform tasks not on the up and up to get your credit report “repaired” or they do nothing at all other than take your money and leave you with an unchanged credit report.

Some of the illegal acts these companies may perform in lieu of repairing your credit involves setting up an new credit identity, using a false EIN number. Other methods include filing false disputes with the credit reporting bureaus to instigate an investigation that is unnecessary and not always in the best interest of the consumer. Some companies will operate on the up-and-up, performing actions that are legitimate but end up charging the consumer ridiculous amounts of money for acts the consumer can easily do on their own. For consumers who are already having issues with their financial situations and maintain a tight budget, it can be disastrous to have to pay high fees for a period of time for help that isn't really helping.

Rule of Thumb

As with many things in life, the old cliché “if it looks too good to be true, it usually is” stands true. There is no person or agency that can give you an excellent credit score or a strong credit history. Repairing credit is certainly possible but it takes time. It will not and can not happen overnight. Credit repair is a progressive process that does not have to cost extra money and does not have to be done by anyone but the consumer himself. Any company that is advertising a fast and easy way to repair bad credit is not being entirely upfront. There is no simple fix, regardless of their claims.

If you are facing bad credit problems, there are solutions that can be used to repair your bad credit over time. While it may seem like a great idea to repair your credit in a hurry, remember that no one has the power or pull to change a credit history, except time and a concerted effort on the part of the consumer.

Ho to Fix Bad Debt

2009-09-02T14:39:00.000-07:00

1. Consolidate your debts

This means putting all your credit card bills and loans into one so you make one monthly payment instead of many. With the debt consolidation method, you will be able to slowly get out of your financial troubles by paying your creditors a fixed amount every month. Debt consolidation is now used loosely to define a loan (unsecured or secured), credit counseling, debt settlement and even at times Chapter 13 bankruptcy.

2. Undergo credit counseling

Some credit card companies would rather take your payments interest-free rather than not collect anything from you at all. If your credit company is offering a debt reconstruction program, avail of it immediately. These agencies attempt to lower your interest rates so you can pay off your debt in a shorter period of time.

3. Settle debts through third-party mediators

There are third-parties that help creditors and debtors meet at a common point through the process of debt negotiation. This is a service that allows you to negotiate with your lenders so that you can settle the debt for a reduction of what is owed in principle.

4. File for bankruptcy

If all else fails, declaring bankruptcy may just be the easiest way out for you. When you file for bankruptcy, you would be asked to submit all your assets and liabilities for the court to analyze them and liquidate when necessary.

5. Consult with a credit repair team

There are organizations which expertise is to repair bad debts. Talk to them and find out what methods they have to help you. Keep in mind though that you may be able to do what these companies do on your own. You just have to do your homework.

Disadvantages of Debt Settlement

2009-08-28T09:23:00.000-07:00

If you find yourself facing a mounting pile of debt that is keeping your from reaching your financial goals, it is important to understand all the options available to you in regards to debt elimination. There are several methods of eliminating debt, some that have more risks and disadvantages than others. The only way to really eliminate debt with no risk or possible consequences is by paying it in full, on your own through aggressive repayment. Whenever you utilize another method there are pros and cons which you should be fully aware of in order to avoid finding yourself facing more, not less financial stress in the future. Here we will cover the disadvantages of debt settlement- a popular, legal method of reducing your debt by negotiating a settlement for less than the amount you currently owe.

•There are no guarantees- This method of debt elimination is risky in that there are literally no guarantees. Whether your creditor agrees to a settlement and if so what amount is something that can not be predicted. Whether you will have the funds available to take advantages of debt settlement offers is also not guaranteed as you have no idea how much money to put aside in your settlement account. For this reason it is important to save as much money as possible to take advantage of settlements when they are on the table.

•Impact on your credit- In a world where creditworthiness is everything, anything that hurts your credit history or score is something to be avoided. Debt negotiations only take place once an account is past due, therefore the very act of settling a debt will have a negative impact on your credit. Not only will your account show as past due; if you are successful in negotiating a settlement it will appear on your report as settled or paid (less than the amount due). This will be viewed as a negative by future lenders. On the other hand if you are already behind on your payments, debt settlement will not hurt your score any more than it already is, in that settled accounts are view more favorably than accounts that are remain unpaid.

•Tax consequences- Any debt forgiven over $600 has to be reported to the IRS. You may find yourself liable for paying taxes on that amount if you are unable to prove you were in fact insolvent at the time of settlement.

•Stress- There is no doubt that being unable to pay your bills can be stressful. Add to that the constant hounding of bill collectors and collection agencies and it can become almost too much for many people to bear. Although many debt settlement companies suggest they can stop the calls, this in fact is not true. Your creditors have every right to contact you in an attempt to collect the money they are owed, however once your debt is turned over or sold to a collection agency, there are certain rules they must follow to ensure you are not being treated unfairly. All things considered however, the worry and stress of eliminating debt is a very real disadvantage.

•Legal issues- While it is less common than most people believe, there are situations which result in legal actions taken against a person who does not repay their debt in full. Although unlikely, there is always the possibility your creditor will decide to pursue legal actions to force you to repay your debt in full. Please note that this can not happen without your notice, therefore anyone trying to collect a debt claiming to hold you paycheck or put a lien on your property cannot do so without actually taking the steps necessary to start the legal process.

These are a few of the disadvantages of using debt settlement as a form of debt elimination. It is important to remember that most people considering debt settlement are already behind or about to fall behind in making their payments, making many of these issues a moot point. For example, whether or not you decide to use debt settlement if you fall behind on your bills you will still face the possibility of legal actions, negative marks on your credit and stress from dealing with bill collectors.

Advantages of a Debt Management Plan

2009-08-26T15:13:00.001-07:00

One of the several options available for consumers trying to eliminate high levels of debt is a Debt Management Plan (DMP). If you are considering this type of debt relief you are probably having difficulty keeping up with your debt payments but have the ability to tackle your debt by making changes in your day-to-day spending. This program is not designed for people facing a severe financial hardship who have no expectation of being able to stick to a monthly payment plan due to financial restrictions. In most cases a DMP is part of a credit counseling program which not only arranges the repayment plan, but also collects and distributes your payments to your creditors. Most programs last from 36-60 months with borrowers agreeing to pay one monthly payment to their DMP with the understanding that payment will then be broken down and disbursed to pay individual accounts. As with all debt relief programs a debt management plan has both pros and cons. Here we will cover the advantages of using a DMP to help eliminate debt.

• Support- Most people struggling with debt often feel they are alone in their battle to regain control over their finances. Of course that is not the case as millions of people are facing similar circumstances as a result of the economy, however knowing others are going through the same thing does nothing to help fix your own personal finances. When you enroll in a debt management plan you have the support of a credit counseling agency which can make the difference between successfully eliminating your debt or years of continued struggle. You not only address the debt that you have but also have resources available to learn how to manage your finances better in the future, which is vital in living a debt free life.
• Better terms- Once you enroll in a DMP your credit counseling agency will work with your creditors to lower interest rates, waive fees and eliminate penalties.
• Save money- With better terms more of your monthly payment will go toward the principle balance versus being absorbed by high interest charges and fees. This makes it possible to reduce your debt in a shorter period of time, paying less interest in the process.
• Structure- Not only does the program offer support but the structure and organization that many people lack when managing their own finances. If you have several accounts, each having their own due date and minimum payment it is often difficult to keep your accounts in order. A debt management plan eliminates the need to keep track of multiple accounts by allowing you to make one monthly payment.

Getting out of debt can be a long and tedious process but one that is necessary to regain control of your life. By enrolling in a debt management plan you are taking the first step toward financial freedom and a future where you are able to accomplish your financial goals.

What The New Credit Card Legislation Means For You

2009-08-21T08:14:00.000-07:00

Yesterday, on August 20th 2009, Maggie Rodriguez from CBS News' Early Show discussed what the new credit card legislation means for consumers moving forward with financial analyst Ray Martin, who also works for CBS.

From Yahoo! Finance

2009-08-20T14:28:00.000-07:00

Yahoo! Finance released an article today that illuminates some of the potential outcomes of the new credit card legislation that became effective as of August 19th, 2009. Specifically, the article discusses how credit card lenders plan to generate profits now that the legislation has banned "unexpected interest hikes" and other aggressive practices, something the lenders will no longer reap the benefits from.

Obama On Credit Card Debt

2009-08-19T14:20:00.000-07:00

Negotiating Credit Card Debt

2009-08-19T08:00:00.000-07:00

When it comes to negotiating your credit card debt there are two main options, each of which requires a different approach. Consumers facing an ever growing balance on their high interest credit cards find themselves in the unenviable position of either continuing to make payments as they have in the past or to attempt to negotiate with creditors to lower their debt. They can do this in the following ways:

1) Contact their creditor to get lower interest rates, waive fees or negotiate other factors which make the terms more favorable and affordable for the card holder

2) Negotiate and/or settle their accounts for less than the balance owed

Each process is designed to make paying off your debt easier, but which one is right for you? Here we well look at a few things consumers should consider before negotiating credit card debt.

Negotiating Terms

For consumers who find themselves unable to make headway with their high interest credit card debt but are able to make the minimum monthly payments, negotiating the terms of your account would be a good first step. This can be accomplished by either contacting your creditors yourself or using the services of a credit counseling/debt consolidation company which will negotiate better terms on your behalf. If you decide to negotiate on your own, you will have to contact each creditor individually to state your case and continue to pay your payments directly to individual accounts. If you opt for third party assistance you will likely make one payment to the company working on your behalf who in turn will allocate monthly payments to individual creditors. By negotiating lower interest rates and waiving penalties and fees more of you payment will be applied to the principle balance versus getting absorbed by interest charges and various fees. This will help you pay off your debt in a shorter period of time but you will be paying off you debt in full, versus negotiating a reduced payment.

Negotiating a Settlement

This option should not be confused with the negotiating favorable terms as it is a complete and separate process with different risks and results. Debt negotiation is a process that should only be considered by individuals who can no longer reasonably pay their minimum payment and therefore are either behind or about to fall behind on payments. As with the first option, you can either attempt to negotiate your debt on your own or employ a third party company to negotiate with your creditors on your behalf. The difference is you are not negotiating better terms, interest rates or waiving fees and penalties. Instead you are basically saying that while you would like to hold up your end of the credit card contract you are unable to do so as a result of a severe financial hardship. Instead you attempt to settle your account for less than the amount you owe. A creditor will not entertain this option for accounts that are current, therefore you will likely not receive a settlement until your accounts are past due, charged off or in collections. Therefore your credit will be damaged, you will be subject to calls and other correspondence from debt collectors and you risk the chance you might be sued before a settlement is reached. If you are willing to take those risks and are able to save some money toward settlements, this option may be your best chance of eliminating your debt once and for all. If your creditor agrees to a settlement you can save as much as 60% of the balance owed, however you will have to pay that balance in one lump sum when the settlement is negotiated. Some creditors will consider two payments to ease the financial burden but you should be prepared to have funds available in a short period of time once a settlement has been reached. Ultimately, this is a better option for people who are trying to avoid filing bankruptcy.

As you can see there are significant differences between the two options and each is geared specifically toward consumers meeting the financial requirements. Before negotiating credit card debt either on your own or through a third party company you should first take a close look at your financial situation to determine which process is right for your circumstances. Also remember that once you engage the help of another party, there will be fees associated with the process that affect how much money you will save in the long run.

The Cost of Debt Settlement Programs

2009-08-18T14:14:00.000-07:00

Under scrutiny from the government and many consumer advocate groups, debt settlement companies are considered by many a risky choice for consumers trying to get out of debt. It is important to remember that the process itself does not actually change very much whether you negotiate your debt on your own or through a third party company. In fact the risks and consequences are basically the same which makes some people question why working with a debt settlement company is more of a risk than going it alone. The main differences between handling your own negotiations and employing an outside party to do so on your behalf lie in the cost of using a third party company as well as in the lack of control over your accounts when you empower another party to handle all communications. Here we will cover the costs of using a debt settlement company and whether or not it is worth the risk.

How much will it cost?

Determining the cost of enrolling in a debt settlement program is one of the most difficult and often confusing factors when deciding which company to entrust with your financial future. One thing is certain, you will pay for services provided, how much depends on several factors. Most companies do not disclose their fee structure on their websites due to the fact that each situation is different and most companies base their fee on how much debt is enrolled in the program. Another thing to consider once you find out how much the program will cost is how and when the fees are applied. Here are a few questions you should ask before proceeding with the enrollment process:

1) Are the fees front loaded? This refers to companies that charge the majority of their fees in the first few months of the program. The reason this is important is two-fold. First, any company that collects the majority of their fees in the beginning of the program might be less inclined to put forth their best effort on your behalf as they have already been paid for their services. The second and often more damaging consequence is due to the fact that fees are included in monthly payments. This means if you are saving $400 per month toward settlements and are charged $350 in fees for the first three months, you have only saved $150 toward settlements in three months.

2) Are there additional service or maintenance fees? Many debt settlement companies require monthly payments (savings) be placed in a third party FDIC insured bank. There may be service fees or maintenance fees associated with this account or other charges as a result of handling your credit accounts.

3) Do you offer a refund or guarantee? There are some companies that do not even bother to offer a refund or guarantee and then there are those that offer them but they are not very useful to the consumer. Find out exactly what if anything is covered or refunded and remember that the debt settlement process can take anywhere from one to three years, therefore money back guarantees should be based on the length of the program, not the first 30 days. Also, confirm beforehand that all monies in your account remain in your control. You should have access to and the authorization to recover these funds (minus agreed upon fees) at any time throughout the program.

Now that you have a basic understanding of how many companies charge for their services, you are probably still wondering how much it will cost? As a general rule (and please note every company is different) debt settlement companies are currently charging 15% of the debt enrolled in the program. If you enroll $20,000 of unsecured debt in a program, expect to pay around $3,000 in fees to the debt settlement company. If all things go well, you may settle that $20,000 for $10,000 which means you end up paying $13,000 to eliminate $20,000 of debt. Remember though that there are no guarantees with this process and no one can “promise” results.

Creditors may not agree to settle your account or may settle for a higher percentage than normal. In the worse case scenario, you may find yourself out the money you paid the settlement company and still have the same amount of debt and possibly face filing for bankruptcy in the end. The true cost of debt settlement simply cannot be summed up in a few words, each situation is different and each person may experience different results. This is the real risk of the process and one which should be carefully considered before enrolling in a program.

Participate!

2009-08-17T13:48:00.000-07:00

Feel free to participate in my weekly poll and see how well you know the ins and outs of the credit card industry!

Debt Settlement

2009-08-14T11:49:00.000-07:00

Debt settlement is an emerging industry that many consumers who are facing a financial hardship will turn to for help in becoming debt free. Unlike credit counseling, debt settlement is the process of debt negotiation, in which a lender and a borrower agree to settle the balance for a reduction of the principle amount owed.

For example, if a consumer owes $10,000 in unsecured credit card debt, they may be able to settle that balance for roughly 40-60% of what is owed. Of course, how much money people can save by settling their debts varies on who the lender is, how far past due the account is and whether or not the account has been placed with a third party collector or not. For people who are having difficulty managing their finances and feel they need an alternative to filing bankruptcy, debt settlement may be a suitable option.

There are some important things in regards to debt settlement that consumers must understand before attempting this approach with their creditors. For one, lenders will not settle a debt if the consumer is current on their monthly payments as they have no incentive to do so as long as they are making interest off of the account. As a result, settling your debts will have a negative impact on your credit score- the lender will report the account as past due until the balance has been resolved. Also, debt settlement companies cannot get all collection calls to cease, as many restrictions placed on collectors by the Fair Debt Collection Practices Act (FDCPA) only apply to third party debt collectors and not the original creditors. Furthermore, creditors reserve the right to pursue legal action to collect on a past due balance. So there is some risk involved, and debt settlement is certainly a more aggressive approach to becoming debt free than its' credit counseling counterpart.

Before enrolling with a debt settlement company, it is necessary that all consumers do their homework. A good way to check up on a company's reputation is through the Better Business Bureau (bbb.org). There, you can see what grade the BBB has given the company, how long they have been in business and how many complaints have been filed against the company.