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The Choice, Debt Settlement or Debt Elimination

Matthew Savage — Mon, 23 Mar 2009 02:43:02 +0000

Jim Vrana asked:

A very common problem for many American consumers is overwhelming credit card debt. Too many people pay their monthly minimums, month after month, without any knowledge that their debt burden may never go away.

When a person comes to the realization that they are caught in a never ending payment schedule, they may then realize that help is needed. The unknown for most people is what kind of help is available, and how to find it.

Selecting the best plan of action can also add the stress caused by the debt in the first place as understanding all of the options to relieve themselves of debt can be very confusing.

One of the most popular options is Debt Settlement. This is not necessarily the best option, but it is certainly the most heavily advertised. Many Debt Settlement companies are just extensions of the credit card companies themselves.

A reputable Debt Settlement company will attempt to contact your creditors and negotiate a payoff or settlement, for less than is owed. This can get somebody out of debt very quickly, assuming the settled amount can actually be paid quickly.

There are a few things to be aware of with Debt Settlement. A Debt Settlement company may claim that you have the right to settle your debts for pennies on the dollar. This is true, you do have the right to do this, but it does not mean that your creditor has the obligation to actually agree to a settlement. If a settlement amount is agreed upon, the total settlement amount might need to be paid immediately to be accepted. If a payment plan can be agreed upon, the settlement amount will probably be higher, and you must stick to the payment schedule.

For this reason, the settlement company might instruct you to stop making your payments to the credit card company, and start to build up a cash reserve account. You might need to accumulate several thousand dollars before they will actually begin to contact your creditors. Meanwhile, negative entries will be reported to the credit bureaus, and the harassing collection phone calls will begin.

In addition, the Debt Settlement Company will also want their fee, which can be 5 to 20% of the negotiated debt. So how much is really being saved?

An alternative may be a debt elimination program. This will allow a person to legally walk away from 100% of their non-secured credit card debt, without bankruptcy, consolidation, or refinancing. A person can enter into this program just once. It’s kind of a financial “do-over”.

With a debt elimination program, a person can select which cards to eliminate. Some cards can actually be kept. The eliminated cards can no longer be used. The ultimate goal however, is to learn how to live without credit cards altogether. It will amaze you to learn how much money you can save if you are not paying interest to the credit card companies.

A good program will have you debt-free in 6 – 12 months. An elimination program does not perform its function overnight. The program should also include an education on the credit card system, so that it is understood just how and why an elimination program can work.

Student loans, medical bills, and any secured loans such as mortgages and auto loans do not apply to a debt elimination program. Only major credit cards, signature loans, and unsecured lines-of-credit are applicable. For these types of debts, a true elimination program may be the financial re-start people are looking for.

Student Loan Debt Relief – School Loan Consolidation

Matthew Savage — Mon, 15 Dec 2008 14:42:19 +0000

Ivar Rudi asked:

Student Loan Debt Relief – School Loan Consolidation

In order to relieve some of the financial burden associated with furthering their educations, many students are opting to consolidate their debt at lower rates, and getting a longer period of time to repay. The following paragraphs will answer some commonly asked questions about the subject, as well describe how it can aid in debt relief.

What Is Student Loan Consolidation?

It is the act of combining your school loans into one in order to help manage your financial burden caused by college or trade school. When you consolidate you will only have one monthly payment to make, which is usually lower than your combined monthly payments of your unconsolidated loans. This is possible because when you consolidate, you are generally offered a longer time period to repay – sometimes up to 30 years. Many consider the lower payment a huge benefit, which it is, but it can also cause you to pay more interest, over a greater length of time, than you would with your combined unconsolidated student loans.

The rates are generally lower, and most often the rate will be fixed. With unconsolidated loans, most commonly the interest rates are variable, which means they can change at any time, sometimes without much warning. With a fixed rate, the monthly interest will remain the same throughout the entire duration of your consolidated loan.

What If I am Default on My Student Loan Payments?

If you are default in making your payments, you may still qualify. It is important to check with your debt holder, to ensure your defaulted loan has not been subject to wage garnishment. If your defaulted debt is subject to wage garnishment, you may not be able to consolidate.

How Can I Obtain More Information Regarding School Loan Consolidation?

There are many ways to obtain more information regarding this issue including:

· by requesting it from the financial aid office at school · by requesting it from the holder of your original student loan · by researching the internet

Information is usually available in any financial aid office of any learning institution. If you cannot get to your financial aid office, or if your financial aid office does not have the information you need, please request the information from the holder of your original loans, or search the internet for valuable information on the subject.

Knowledge is the key in finding the best rates available. The more knowledge you have on the subject, as well as knowing your credit scores, the better your chances of getting a good interest rate when consolidating your loan.

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Top Ten Reasons People File for Bankruptcy

Matthew Savage — Tue, 16 Sep 2008 12:32:06 +0000

Bankruptcy Home asked:

1. Eliminate the legal obligation to pay many of your debts.. This process of wiping the slate clean is called a discharge of debts. The goal of a discharge is to reduce debt to give you a fresh start. Whether it is through straight bankruptcy (Chapter 7 Bankruptcy) or through reorganization (Chapter 13 Bankruptcy), most or all of your debts can be cleared.

2. Stop foreclosure on you house and allow you to effectively make payments to catch up on missed payments of your mortgage. If your home is in foreclosure, Chapter 13 Bankruptcy will stop the foreclosure any time prior to the sale. Bankruptcy does not eliminate mortgages on your property without payment. Rather, bankruptcy will structure a plan in order to repay your mortgage arrears (the amount that you are behind).

3. Prevent your car or other property from being repossessed.

Even if the creditor has repossessed your car, filing bankruptcy can effectively force them to return your car or other personal property (if the bankruptcy is filed quickly enough). The past payments you have missed will be consolidated into your Chapter 13 Bankruptcy plan. After this you will no longer pay the finance company, rather you will make monthly payments to the trustee of your Chapter 13 Bankruptcy who will then pay the finance company.

4. Reduce or even eliminate high medical bills.

Sometimes an unfortunate accident or major recently discovered illness can completely ruin a family. Many families have to make choices on allocation of bills. Often, bills that were once important become insignificant to the large medical bills acquired by a loved one. Filing Chapter 7 Bankruptcy can greatly reduce the amount of medical bills. 5. Recent loss of employment.

Studies show that loss of work is one of the most common reasons people file for bankruptcy. This is very easy to see. A family can get comfortable on two maybe even one salary. They can take on regular amount of debts, join clubs, and pay normal bills with relative ease. All of a sudden one or both spouses lose a job and a family must go from two salaries to one. Losing a job is closely tied to high medical bills. Losing a job means this family may be left without the protection of insurance that was once provided by their employer. Often times these two factors combined create an almost impossible mountain to climb without the help of bankruptcy.

6. Stop harassing behavior from creditors.

Some creditors do not always take the right course of action when attempting to collect a debt. Often, creditors will persistently call the home of a particular debtor with demeaning and abusive behavior. Not only is this unethical it can rise to the level of unlawful. In essence, bankruptcy will put on hold the demands of many creditors and stop the harassing phone calls and other inappropriate behavior all together.

7. Restore or prevent your utilities from being shut off.

As you have probably seen many of these reasons overlap. Some lead to another. If your home is in risk of foreclosure then your utility bill may also be in risk of being terminated. Filing bankruptcy can prevent the utility company from leaving you in the dark.

8. Provide help for large amounts of student loan debt.

While it is true that your student loans will not be eliminated like several other types of unsecured debt, bankruptcy can consolidate your student loan debt. This consolidation will allow a debtor to make monthly payments through Chapter 13 Bankruptcy that are within the financial ability of the debtor.

9. End wage garnishments.

Chapter 7 Bankruptcy will stop wage garnishment. Wage garnishment basically takes away your weekly earnings often times leaving you without necessities. Chapter 7 Bankruptcy allows you to purchase necessities for you and your family. Chapter 13 Bankruptcy will also help in this regard.

10. Challenge certain claims of fraudulent creditors.

Bankruptcy will allow you to challenge these claims from creditors who are trying to collect more money from you than you really owe. An attorney can provide the support and the backing you will need to step up to these creditors. Attorneys often even the playing field between a big creditor and a single debtor. Filing bankruptcy with an attorney can stop fraudulent reporting by a creditor.