The Center For Debt Management
[an error occurred while processing this directive]
[an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive]  

Your Alternatives When Faced With Financial Hardship

—Article by Daniel Gelinas

... Continued From Previous Page

Consumer Credit Counseling Services
Debt Management Program

For individuals who are overburdened with debt but not a prime candidate for bankruptcy, a Consumer Credit Counseling Service or debt management agency is often their best option for debt relief. It's not, however, designed for everyone. First off, a lot depends on who the creditors are. Consumer Credit Counseling Services primarily work with unsecured debt, such as credit cards, installment loans, retail finance plans, medical bills and personal debts. Second, contrary to popular belief, Consumer Credit Counseling Service cannot force creditors to accept their proposals. Although most creditors will work with these agencies to effect a workable solution, many creditors have minimum payments (based on the outstanding balance) that they will accept. Applicants, therefore, need to have sufficient income to support the revised lower payment, as well as enough income left for basic living expenses.

Unlike bankruptcy, clients have to repay their financial obligation through enrollment in a Debt Management Program, but there are many benefits. There are no legal expenses, no court hearings, assets and possessions are retained, credit reports usually improve and all transactions are confidential. In addition, amicably resolving their financial obligation rather than simply having them dismissed through bankruptcy, debtors have a better sense of self-esteem. Future prospective lenders and those aware of the situation may also have greater respect for the individual realizing his or her effort and determination to liquidate their debt in a manner approved and supported by the individual's creditors.

Typically, enrolling in a Debt Management Program will consolidate accounts into one "lower" monthly payment, eliminate past due amounts, reduce interest rates, stop expensive late fees, bring accounts current and put an end to upsetting collection calls. If you are currently experiencing financial hardship, you should weigh all of your options, especially a Debt Management Program. A Debt Management Program will amicably resolves your financial problems, puts an end to upsetting collection calls, provides a path to financial freedom and "save" you money in the process.

To learn more call 1800 DEBT.COM (that's 1800-332-8266) right now!

Debt Reduction Settlement

A Debt Reduction Settlement, negotiated properly, can quickly and dramatically reduce one's debt. Essentially, a Debt Reduction Settlement is a negotiated settlement for less than what you owe. If negotiated properly on behalf of the debtor it can quickly and dramatically reduce the debtor's debt. Settlements range from 20% to 80% of the current debt, with the typical debt settled for 45 cents on the dollar. After paying Agency fees, a typical client realizes a savings of around 40% of their original debt placed in the program.

While the debtor may negotiate their own settlement, it is usually best working through a third party debt negotiator who knows the ropes and can watch out for the debtor's best interest. There is definitely a right and a wrong way to handle this procedure, and failing to do so correctly may yield negative results.

Consumers in financial distress typically raise funds to settle their debt by opening a mandated savings account, whereas money is deposited into the account on a regular basis. Oftentimes, to accomplish this debtors elect to stop making payments on their unsecured accounts, opting to place whatever funds are available into the account.

When enough money is saved, a debt reduction settlement is negotiated for one of the accounts. The strategy, of course, is to first settle the account which is most troublesome and which may provide the greatest savings. The process continues in this fashion until all debts have been settled in full.

Other methods used by consumers to acquire the needed funds, or sources to withdraw funds from, in order to settle their debts include:

  • Savings Account, Money Market Account, CD's
  • Stocks, Bonds, Mutual Funds or Other Investments
  • Borrow from Family, Friends, or Relative
  • Retirement Funds
  • Borrow from Whole Life Insurance Policy
  • Sell Assets
  • Credit Card Advance
  • Home Equity Loan
  • Home Equity Line of Credit
  • Second Mortgage
  • Home Refinancing
  • Reverse Mortgage
  • Personal Loan
  • Increase Your Income

While it typically takes 4 to 6 years to pay off debt through Debt Management Program, often the same amount of debt can be settled in 12 to 36 months through a Debt Settlement.

To learn more call 1800 DEBT.COM (that's 1800-332-8266) right now!

Filing For Bankruptcy

Bankruptcy is the ultimate recourse to debt problems and should only be considered as a last resort. This course of action may have long lasting consequences, therefore, one must always give this option serious thought before filing. While anyone can filed pro se, in many cases, personal bankruptcy is best handled by attorneys that specialize in consumer debt. This is especially true when there is a home and/or major assets involved. Court fees are currently set at $160 and attorney fees typically range from $500 to $1,500.

Bankruptcy is a Federal process which requires filing specific legal documents and appearing in bankruptcy court. All listed creditors are notified when one files bankruptcy. Pending legal suits are given an "automatic stay" and all collection activities must immediately stop. In some circumstances, however, a creditor may ask the court to "lift" an automatic stay. In addition, all creditors have a right to appear and be heard at the bankruptcy hearing.

While bankruptcy can dismiss all or some of an individual's debt, those filing bankruptcy could very well loose many of their assets and possessions. It should be noted, however, that oftentimes individuals are allowed to keep all or most of their assets. What individuals are allowed to keep vary from state to state according to Federal and State exemption laws. Bankruptcy typically will not dismiss child support, alimony, taxes, recent students loans, certain judgments, fines and penalties imposed for violating the law, debts due to recent extravagant purchases or any transactions that may be considered fraudulent.

As bankruptcy is essentially an act to dismiss one's financial obligations, it is often frowned upon by most individuals. It may be recorded on the consumer's credit report up to 10 years and forever remains public record. Many banks and lenders refuse to extend credit to anyone who has filed bankruptcy. You should also be aware that employers and landlords often check applicant's credit history. In addition, unbeknown to most individuals, Federal law allows credit bureaus to maintain two records; the standard file and a lifetime file. Credit bureaus may give out an individual's lifetime file under these circumstances:

  • For credit transactions involving at least $150,000. (for example, a mortgage)
  • To insurance companies when applying for a policy at least $150,000.
  • To employers in regards to a job that pay an annual income of at least $75,000.

One of the biggest drawbacks to filing bankruptcy is that lenders who do elect to lend money in the course of time, will typically only do so at a higher-than-normal interest rate. On high ticket items, especially a new car or home, a bankruptcy may cost the individual big time! Just an extra 2% to 4% in higher interest rates could easily add up to many thousands of dollars during a spans of 10 years depending on the amount of money borrowed.

On the up side, the Bankruptcy Act was enacted to assist debtors who have no other alternative. It may dismiss a debtor's total debt or leave them with only minor debt. If the consequences of bankruptcy are fully understood and the debtor is willing to accept these repercussions and takes positive steps to better manage his or her financial affairs, filing for bankruptcy may provide the individual or family a new lease on life.

In time and with proper money management, credit may once again be granted. Some creditors may even grant credit immediately after one files bankruptcy realizing that the consumer now has a fresh start and is prohibited by law from filing for bankruptcy again until waiting a period of six years. It must be remembered, however, that many individuals regard bankruptcy as an easy fix, fail to learn from their experience and again find themselves in financial hardship

Final Thoughts

We sincerely hope that this article has been insightful and assist you in resolving your financial hardship. Whatever decision that you make may have long term consequences, so it is important that you weigh your options carefully. You will find many people and companies, especially on the Internet, that will quickly dismiss any of the above options as being fruitless (or foolish), except of course, the one's that they offer. But the truth is, any of the alternatives noted above can be a viable option in the right set of circumstances.

If you are facing financial hardship and have substantial equity, than you certainly need to consider using some of that Home Equity to resolve your debt. And all debtors should look for means to Increase Income and Reduce Expenses. For consumers deep in debt without home equity or other financial assistance, however, there are only 3 real alternatives: a Debt Management Program, Debt Settlement Plan or Filing For Bankruptcy. If you need help to get out of debt, you can speak to a debt counselor at 1800 DEBT.COM (that's 1800-332-8266). The call is free, the consultation is free and there is no obligation.

The biggest mistake consumers make is putting off taking steps to resolve their financial hardship. Don't wait until filing for bankruptcy is your only viable alternative. Call toll-free and get help today!

Need to Get Out of Debt! — Call Right Now — 1800 DEBT.COM

  [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive]
[an error occurred while processing this directive]
[an error occurred while processing this directive]