As the credit crisis worsens and unemployment looms over the heads of hundreds of thousands of people due to mergers and fallouts of big business, people are flailing around just to meet the minimums on their basic expenses. More and more people are seeking answers and alternatives to get out from under the rock that high interest debt presents.
As people turn to other options they are presented with options of debt consolidation, credit repair, debt settlement, bankruptcy and credit counseling. As a senior debt counselor I couldn't recommend any particular program with out conducting a financial analysis but I can say that debt settlement is the fastest program and easiest to bounce back from. (Please note: every debt relief program will affect your credit score to some degree, the goal is not to improve your credit rating but to get you out of debt once and for all.)
What is debt settlement? Debt settlement, also known as debt arbitration or debt negotiation, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. Now, I hear the question frequently, "who qualifies for debt settlement?". Some qualifying questions that may clarify this question are as follows:
Having serious difficulty meeting minimum monthly payments
• Credit card balances that are getting close to the limit or are already there
• Receives a constant stream of collection notices and phone calls at home, at work, or on the weekends.
• Experiencing negative cash flow (where your expenses are larger than your income month after month)?
• Have you seriously considered of bankruptcy, but have a strong desire for a bankruptcy alternative?
• Are you using credit cards to meet monthly expenses, spiraling further into debt as time goes by?
• Are you doing everything you can to make your monthly payments, only to fall short?
• Are you skipping payments (or defaulting altogether) on any of your credit card accounts?
• Are you faced with a life event (job loss, illness), that has suddenly put you in a painful financial position
Furthermore, debt settlement is intended for people in or that will be facing hardships.
What are "hardships" and do I qualify?
Here is an example list of hardships that lenders consider during the financial workout process:
• Adjustable Rate Mortgage Reset- Payment Scock (uncommon, but we will see more lenders accept this in the future)
• Illness
• Loss of Job
• Reduced Income
• Failed Business
• Job Relocation
• Death of Spouse or C0-Borrower
• Death
• Incarceration
• Divorce
• Marital Separation
• Military Duty
• Reduced Income
• Medical Bills
• Damage to Property (natural disaster or unnatural)
If you are or will be experiencing any of these "symptoms", you may need to contact a professional. Many people can take on the challenge of handling these matters on their own but I will caution you: it is a time consuming process and being less experienced, one could in fact make their own matters worse.
How Will Debt Settlement Affect My Credit Score?
The most frequent question that is asked is how are credit scores affected while enrolled in a debt management program. Let me first start off by stating that any and every debt relief or management program will negatively affect your score. In fact, anything short of paying off debt in a timely manner will negatively affect ones credit score. Now, that “disclaimer” is out of the way, let’s get to the facts.
Credit Card Companies Crackdown- What Does This Mean For You?
With all of the banks in a panic to reduce their losses to their mostly fraudulent practices, many of the larger lenders are putting into place more restrictions to yet again deter the hard working citizens from escape of the debt trap. Recent news coverage and yet more to come are announcing changes that will affect life as we know it- even for the responsible card holders and especially for the predatory lending practices for high interest consumers today. So be on the lookout and be very wary of up and coming changes to your credit, may it be bad or good.
Predatory Lending and Criminal Credit Card Corporations
More and more families are relying on credit cards to weather the storm during economic dowmnturns and are being lasered in on by billion dollar credit card companies and their criminal practices. Recent emphasis on this topic has been making headlines but little has been done to crack down on predatory lending practices, in fact our "government" have given them $700 billion...
