Debt Settlement Credit Report
Many companies claim help toward a debt settlement credit report. The Internet is a viable resource of information for anyone looking to reduce his or her current balances and becoming more financially stable. The Internet offers the seeker the opportunity to investigate the various options and companies available while remaining private in the search. Internet shopping keeps the 'salespeople' away from the seeker until he or she is ready to discuss further options. The Internet provides information on do-it-yourself methods and seeking professional help. The Internet is also an abundant resource of articles and financial tools such as fiscal calculators.
Debt settlement companies sell a plan to the client. The plan is to fix the debt settlement credit report. Once the client and the company become partners in eliminating an individuals outstanding financial balances and fixing the report, the company begins working on the plan. The plan involves the client paying an administration fee before the process can actually begin. The administration fee is a percentage of the total amount the debtor owes not the amount later reduced by the settlement company. Each month, the client pays an amount into a savings plan while the firm negotiates with the creditors. The rates charges by the firm can be 15 to 20% or more of the originally owed amount. Meanwhile, the settlement company advises the client to stop all payments. This action brings collection agency calls, more charges as the interest rate fees continue to mount, and damages the consumer's debt settlement credit report. This action could also bring litigation processes toward the consumer especially if the settlement company has chosen to leave the person in the middle of the process.
Many creditors refuse to deal with debit settlement establishments. Usually, the company cannot do any better at downsizing the financial burden than an individual could. Debit negotiators are a better option for helping on a debt settlement credit report. The Internet can provide the best businesses to pursue because of the available rates and programs the businesses offer. A debt negotiator does not become part of the public record. A debtor must seek a debit negotiator is if there are tax complications, a large fiscal amount due, or have multiple creditors. Financial professionals advise against obtaining the services of a debit negotiator if the stated reasons do not apply to the person. If professional help is sought and services rendered a clean slate, the person needs to request that the reflection on the debt settlement credit report reflect "paid in full."
Very rarely do collections agencies take drastic measures such as filing litigation proceedings, although it can occur. The statue of limitations for collections does vary from state to state. While neglecting to pay is not an option, negative marks and collections disappear from a person's credit report after seven years. While filing bankruptcy should not be an option, neither should totally refraining from payments be an option. The IRS can get involved and garnish wages. Depending on the arrears owed, the government could garnish an individual's social security checks. A debt settlement credit report is fixable also by a debtor settling with a collection's agency on his or her own.
Determining which bills to pay can be a daunting task. A borrower should remember to pay the secured amounts first such as a house payment or vehicle payment. A secured debt means that if the debtor defaults on the settlement the loss would be his or her house or vehicle. Unsecured bills like credit cards and medical bills have nothing substantial attached to them to lose. By combining the unsecured bills into one payment, an individual has a better opportunity to make the one payment and reduce the overall final amount paid.
The debtor could try fixing the debt settlement credit report on his or her own. Several facts are important for a person to remember when contacting a creditor. The individual needs to treat the creditor with respect. A debtor can ask for a balance reduction, interest rate reduction, and monthly payment reduction. Once negotiations are made, a person should negotiate the credit rating the creditor will add to the person's report. When negotiating, the negotiator should never accept the first or second offer made by the creditor. As a last resort, a negotiator can play creditor versus creditor or 'threaten' with bankruptcy. If the individual believes that bankruptcy is possible, he or she may reduce the amount due. The reasoning behind reduction of amount due is that the company would rather receive a small portion than none at all. In filing bankruptcy, companies like merchant accounts are not always paid.
In providing a debt settlement credit report, a portion of the debt could be forgiven. The portion forgiven is classified as taxable income. The IRS considers the forgiven portion an actual earned income. Therefore, a debtor needs to remember to pay the taxes on the forgiven portion. If not, the IRS will come knocking. "Then saith he unto them, Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's" (Matthew 22:21). In whatever method of fiscal reduction is used, records need to be kept. The records should clearly show day, time, and person with whom communication occurred. The individual should also do his or her best to record as much of the conversation as possible too. All transactions, whether by email or by regular mail, should be copied and kept.
Debt Settlement LettersDebt settlement letters are made by the debtor in an effort to negotiate the payment on past due accounts. A consumer can decide to handle his or her own negotiations or may decide to use an organization that has experience with these types of debates. Promising creditors a reasonable percentage of a debt can be done but the consumer must be able to pay the agreed amount in a reasonable amount of time before most creditors will agree. Negotiation with a creditor may be challenging but there is information on the Internet that will help with how to go about doing this. In addition, there are organizations that counsel individuals with financial problems. Receiving debt collection letters can cause a person to become distressed and depressed. There are laws that help to protect individuals from harassment by creditors and collection agencies.
No one wants to have to deal with creditors on past due accounts. However, when the debt is legitimate then a person should do everything possible to pay it. Late payments usually always mean late fees and high interest charges. By the time a creditor sends out debt collection letters the balance may be much higher than expected. When creditors fail to get responses from debtors they may employ or sell the account to a third party collection agency. First contact from a collection agency will usually come from a letter in the mail asking for clarification of a debt from the account holder. However, some collection agencies adopt aggressive ways to try and collect money. When this happens the debtor does have rights to protect him or her from harassment and threats.
When contacted by collection agencies there are a few things that a person needs to do. When talking to a collector always get their full name and write it down as well as the name and address of his or her company. A fax number and phone number should be written down as well. Ask for the name of the original creditor and the balance that is owed. Let the collector know that a follow-up letter is needed for verification. After receiving debt collection letters a debtor should let the collection agency know how he or she prefers to be contacted. When a collection agency uses harassment procedures or makes threats the debtor can refuse to deal with them. A letter must be written asking them to stop making contact and detailing why the person refuses to deal with them. The best way to avoid having to deal with creditors and collection agencies is to be diligent in paying bills and to try and not become overextended. "And if ye have not been faithful in that which is another man's, who shall give you that which is your own" (Luke 16:12)?
Any correspondence from a creditor or third party agency should be documented. The best way to document is by keeping a file and recording the date and time, who was spoken to, or who the letter is from, and what the conversation or letter was about. Any agreements with collection agencies should be documented with a copy being sent to the creditor. To prove mailing the individual should send the letter by certified mail, return receipt requested. Debt collection letters that are questionable should be researched as soon as possible to be certain that someone has not acquired personal information and used it to open an account falsely. Identity theft is a real threat and should be dealt with as quickly as possible. A person who suspects identify theft will need to contact the creditor who is billing him or her and the credit bureaus to alert them.
When a consumer is unsure if the debt is legitimate he or she should never agree to settle or even make one single payment on the claim. Making a payment is the same as acknowledging that the account is legitimate and makes the person responsible for the remainder of it. Consumers should check the balance with their own records and make sure that the account is legitimate before sending out any debt settlement letters. After the debtor identifies that the account is correct then a letter can be sent out to the collection agency and the creditor with a negotiated settlement. Before making any payments the person in debt needs to request in writing that the agency or creditor accepts the agreement for payment. Many creditors will settle for less than the full balance owed if the individual promises pay off of the agreed amount in a reasonable amount of time. After the balance is paid off the consumer should request a letter stating the balance is paid in full.
When negotiating an agreement on past due balances a person should include specifics in any debt settlement letters on the terms. One specific term that may benefit future negotiations for credit includes the creditor or collection agency contacting the credit bureaus with updated information that the account has been paid off. The consumer should also take advantage of getting a free yearly credit report from each of the credit bureaus so that he or she can become informed about credit. There may be errors on the reports that need to be fixed that pertain to personal information and account information.
Using a debt settlement company to negotiate accounts with past due balances may be easier but will be more costly. Most companies who advertise their services to negotiate through debt settlement letters charge a fee for their services. Some of the claims by these types of companies are that they can settle a consumer's debt for half of what is owed. The debtor should do some research before deciding on a company to use. Companies that have these types of services may also have other services that a consumer can take advantage of to help to conquer financial problems. In addition, taking advantage of a free consultation may help a consumer to make an informed decision on what to do.