Debt Consolidation Bankruptcy
Debt settlement consolidation bankruptcy is a type of program that allows a person to determine the best route for getting out of debt. This type of program can offer hope for a more sound financial future by showing how to get out of debt and provide wise counsel. The options include offering a settlement amount to creditors, consolidating what is owed into one monthly payment, or filing bankruptcy.
A good program offers a structured route with steps that include calculating current debt amount, analyzing the nature and age of the debts, getting and analyzing credit reports from the credit bureaus, and making a list of the accounts that have been turned over to a collection agency. The next step is to settle with the secured creditors first, paying what is feasible in order to avoid repossessions. Dealing with collection agents involves a whole other realm of suggested steps to reconciliation. A good company will be able to help with handling creditors and will be able to offer sound advice in the approaches to take. Researching the available choices and options is a first step toward choosing a debt settlement consolidation bankruptcy program. This can be done in many different ways: Internet, referrals from friends, or thumbing through the phone book. However, when the research is conducted, it is important that it is done thoroughly. Not every company will work for every person, so make sure to ask lots of questions to each potential company in order to avoid regrets later.
A program can lower monthly payments by forty to sixty percent, reduce interest rates, eliminate harassing collection calls, and waive late fees and over limit fees. A debt settlement consolidation bankruptcy program can also help a person get out of debt in twelve to thirty-six months, can help avoid bankruptcy, and can help pay all creditors with only one monthly payment, instead of many. Deuteronomy 23:21 says, "When you make a vow you should not be slack to pay it, for the LORD thy God will surely require it of thee; and it would be sin in thee." When making a promise to pay debts, it is important to be faithful and pay them. If a person can work out a debt settlement or a consolidation program, effort is shown to pay and should appease creditors. If possible, keep from discharging debt in a bankruptcy, showing integrity in financial dealings. A debt settlement consolidation bankruptcy program should be able to help.
A debt settlement is usually made by a third party intermediary to lower an existing balance due with the intention of paying the lowered balance in one lump sum. Debt negotiations are common for debtors that have a history of delinquency with most of their creditors and are considering filing for bankruptcy. Bankruptcy candidates have the edge for convincing a creditor to lower the amount of an outstanding balance. Representatives from settlement agencies can contact multiple creditors and warn them of impending bankruptcy proceedings unless they come to a new agreement.
Most creditors will offer some sort of discount on the balance, but the discount really depends on how much of the balance includes late fees and interest charges. The creditor may not have the authority to lower a balance any further than wiping out the interest and late fees. If most of the balance is from a purchase, then the debt settlement firm may have a harder time convincing the creditor to lower the balance. Debt negotiations are becoming more popular due to the rise in national consumer debt, which currently surpasses two trillion dollars. The average household owes over $18,000, not including mortgages. The most common liability is credit card balances. Proverbs 22:7 warns of this lifestyle: "The rich ruleth over the poor, and the borrower is servant to the lender."
During these compromises, the debtor has the option to request a lower balance for payment in one lump sum, or a higher balance for lengthened monthly payments. Once the payment is made in full, the firm should contact each paid creditor and confirm that they have submitted the "paid in full" status to the credit reporting agency. Debt negotiations should always be in writing in case the creditor does not report the information.
The FICO score, or credit report, is used in this society to determine many important life factors. In addition to interest rates on car loans and mortgages, it affects insurance premium rates, apartment rental and utility deposits, and employment eligibility. Debt settlement firms specialize in helping the debtors settle their liabilities for a more manageable amount. They are familiar with common creditors and their regulations and policies concerning the process of negotiation. Debt negotiations should be done over the telephone during regular business hours. Many firms are listed with the BBB or Better Business Bureau in good standing and, of course, it is advised that a consumer choose a firm with a high rating.
Disadvantages Of Debt SettlementsDisadvantages of debt settlement are not necessarily clear-cut and, the facts can be confusing. Some of the disadvantages apply only to certain people in certain circumstances. For the person wondering about the advantages of debt settlements, bankruptcy, or any other route to peace of mind, he must thoroughly research all of his avenues and determine which avenue best fits his financial picture. The biggest disadvantages of debt settlements revolve around negative credit ratings because using this type of loan process will show on a report for up to ten years. Some experts believe that potential creditors will view this very negatively, thus making it extremely difficult for the debtor to obtain reasonable credit terms during that time. However, other experts dispute those claims. They think that potential creditors will applaud the debtor's efforts to manage money wisely and consider that a better alternative to filing for bankruptcy.
Debt settlement, however, is not a good option for people who are only a month or two behind on their payments. These financial problems can usually be resolved with tightening the belt and curbing spending. Rather, it is geared toward individuals who are many months behind and simply cannot make their payments. In fact, some companies only accept clients with debts of at least $10,000. When analyzing the disadvantages of debt settlements, a person must weigh the damage to his rating with the damage that late and missing payments have made and will continue to cause. Another consideration is that creditors may continue to call and send harassing collection letters throughout the negotiation process. They could even garnish the debtor's wages. These disadvantages of debt settlement are significant; however, many people choose to live with them, knowing that they are short-term hassles. One of the often-overlooked disadvantages is that the debtor may owe income tax on what is owed after the settlement. The creditor may send a 100-C form at the end of the year, and the debtor would be required to report the amount listed as income.
When weighing the disadvantages, it is important to consider both the short- and long-term consequences. The relief of having debts settled can feel refreshing when compared to the anxiety of worrying about debts. However, one of the disadvantages of debt settlement is that the relief will not be long-lasting if the debtor does not address the issues that brought about his debt in the first place. As with any financial decision, it is wise to consult godly wisdom when considering both the advantages and disadvantages of debt settlements. Pray about your situation knowing that God cares about these details of your life. Claim this verse: "Casting all your care upon him; for he careth for you". (1 Peter 5:7) That is the real solution to financial problems.
Unsecured credit card debt settlement strategies are crucial when looking to make any kind of financial plan for the future. Holding any amount of unsecured credit card debt can be a dangerous thing that should be taken care of as soon as possible. There are many different ways to take care of this financial problem. Therefore, it is the responsibility of everyone to find and stick to the best financial plans possible.
The term "unsecured" refers to loans, like a credit card, that do not have a fixed amount attached to the pay back. With these cases, the interest rates can keep building and, if someone does not have a solid plan of action, the amount it will take to pay of the loan could be triple or more the original balance. If numbers, due dates, interest rates and minimum payments are confusing or seem to all run together, then a financial plan is needed. Unsecured credit card debt settlement strategies do not have to be confusing. In fact, most of them are pretty straightforward and will help people keep to a plan instead of going at it alone.
While some debtors may be able to figure out their own strategy for repayment, those people with large amounts of loaned money, probably will need professional assistance. An individual plan, although it may look good on paper, may not be the best bet for someone in the long run. For starters, people who make only the minimum payments each month take an average of 20 years to pay off a 5,000 dollar debt. Therefore, the person would need to pay larger sums each month to feasibly pay this off in a reasonable amount of time.
Therefore, most people are better off finding a professional through an organization that can help formulate a consolidation and repayment plan. Joining with a consolidation organization and talking about unsecured credit card debt settlement strategies will help put all options on the table and the amount of time for each into perspective. Many agencies can lower the minimum monthly payment by half. This is done by negotiating with the lenders to lower interest rates to pay off the debt in as little as 3 years. That is great news to anyone who can only make the monthly payment! Plus more of the money is going to the principle and the person has more pocket money.
People need to remember that the road of financial freedom may be long and may seem mostly uphill. But God does not forsake people when they make a plan to pay off debt: "But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he swore unto thy fathers, as it is this day" (Deuteronomy 8:18). In keeping with this belief, unsecured credit card debt settlement strategies may be the way to go for the best financial life possible.