Debt Settlement can help you, if you have debts that are past due and you now have the funds to settle your account(s). Debt Settlement can settle your credit at the same time too. Many collection agencies will settle a debt from 40%-60% of the debt.

If you would like to have the negative item removed from your credit report, then it will take 60%-80% of the debt. Remember: Settling a debt does not mean that the debt will be removed from your credit report.

Do not try to negotiate accounts that you have at your current bank, financial institution, or if you are in the military (you will place yourself in trouble with your superiors). If you have accounts with finance companies (like Beneficial or Household) or credit unions (like Navy Federal Credit Union) do not negotiate.

These companies will sue you in a second and have documentation to prove that the accounts are yours. You can settle these accounts; but be sure that you have all the funds ready to settle out these types of accounts, first.

Two Rules of Thought

There are two rules of thought in debt settlement. First, settle the debt and then have the creditor remove the negative item. Some creditors may not remove the negative item once paid. They may ask for more money or send back the settlement check. Second, settle the debt and credit at the same time. Many creditors just want to get paid and close the account. These creditors generally will remove the negative item from your credit history for a higher settlement.

Always get all debt settlements in writing including a separate Letter of Removal for all three major credit bureaus before you send any funds. Always send funds with a Cashier's Check, Bank Check, or Money Order.


Debt Settlement Companies & Debt Settlement Letters

Many consumers are using attorneys, debt settlement, debt negotiation, debt arbitration, or debt mediation programs, companies or services. If you have the time and funds to settle your debts, then do it yourself.

When you have the funds to settle write a debt settlement letters to your creditor (s)). The creditor will respond and accept, reject, or make counter offer. It may take one debt settlement letter or several. The good news is that it if they are responding, then they are interested in settling the debt.

Debt settlement has its pro's and con's. Be sure that you are aware of all the legal and tax implications before you join a program. You must also realize that your credit rating will hurt during this process.



Creditor & Collector Harassment

If you are already behind on your bills or if you are using a Debt Settlement Company, then you will receive creditor and collector phone calls and extra mail, be prepared. Debt settlement is a good way to get out of debt quickly and for far less money but there is the danger of being sued by very aggressive creditors and collectors.

There are also tax ramifications. Any account that is settled for less is consider income by the federal government (Be sure to check with your accountant). Some states do not like debt settlement, be aware of your state laws. Some states prevent you from saving money today to settle your bills later.

Lastly, use the same thinking that you would use for CCC or Debt Management. Ask a lot of questions. Be sure that the company can be trusted and check out their BBB Report, and check with the Federal Trade Commission & States Attorney General's Office.

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Bankruptcy is your last debt reduction option. Have you tried debt consolidation, consumer credit counseling or debt negotiation? Bankruptcy will be on your credit for 10 yrs. Visit us for free info.

Bankruptcy filings are growing every year. There were over 1.5 Million bankruptcies filed in 2001. Most bankruptcies are forced by aggressive creditors and collectors that scare the average consumer to seeking protection from the government. Many Americans file with less than $10,000 of debt.

Most bankruptcy can be prevented. One of the goals of a Certified Debt Arbitrator is to inform and educate consumers so that they are aware that bankruptcy is the very last option. There are several other debt eliminating and debt reduction options. Sometime before 2003 has finished the bankruptcy laws will change to make it more difficult to file.

There are two types of consumer bankruptcy, chapter 7 and chapter 13. Chapter 7 is the most common type of filing. This is most common because most debts are written off and do not have to be paid back. Chapter 13 is very similar to credit counseling that is supervised by the courts. Both types have a 10 year impact on your credit.


Bankruptcy Chapter 13
When you file Bankruptcy Chapter 13 you are going before your state court and asking the judge for protection from your creditors and collectors. In a Chapter 13 the full amount of the debt is paid off with government supervision over a three to five year period. Typically any fees, finance charges, and interest are eliminated but most of the debt will have to be paid back by the borrower.

People that have a substantial amount of debt and can afford to pay it off in three to five years should not file for Bankruptcy Chapter 13. Most Bankruptcies can be avoided, but are forced by the aggressive creditors out of fear of being sued (lawsuits) and losing everything. Bankruptcies stay on your credit profile for ten years.

One hidden unknown about bankruptcy is that you have to openly admit that you have filed Bankruptcy for the rest of your life (under penalty of perjury). Businesses and financial institutions can easily find your Bankruptcy by searching the Internet for court records. Filing a Bankruptcy may mean looking at higher interest rates for the rest of your life.

Bankruptcy Chapter 7
Bankruptcy Chapter 7 has all the same stigmas as Bankruptcy Chapter 13 (loss of privacy, ten year impact on credit history, higher interest rates, etc.). Soon, the Bankruptcy laws will change, making it harder to file Bankruptcy Chapter 7. The new laws will require you to attend a briefing on Credit Counseling as well as making the requirements stiffer.
Bankruptcy Chapter 7 is recommended for people that have no choice. There are people that can barely afford to put food on the table and keep the lights on and have substantial amount of debt. This is a good time to think about Bankruptcy Chapter 7. You will not lose everything. Every state has its own requirements of what you will be able to keep and what you will loss.

When you file Bankruptcy Chapter 7 you go before your state court asking the judge for a supervised liquidation of your assets to pay your creditors. Many assets are considered Exempt and cannot be liquidated (cars, a certain amount of home equity, and personal effects). Each state has its own requirements of what can be Exempt.

Most people who file Bankruptcy Chapter 7 have nothing but Exempt Property. So, there is nothing to liquidate and therefore nothing to pay to the creditors. The creditor accounts are then discharged by the judge. Leaving you with very little or no debt.

Explore a career in Professional Debt Arbitration
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Debt Negotiation - Debt Settlement is the process of directly haggling with the creditor to lower the overall amount of your Debt. Debt Negotiation is not a new procedure, many companies and countries have been doing it for years. Recently, debt negotiation has become available to consumers. There seems to be a new company offering this service every month.

Debt Negotiation requires being behind on your bills or not paying your creditor (s) for a while, and then settling that debt with a Lump-Sum payment. Many professional Debt Settlement, Debt Negotiation and Debt Arbitration Companies or Lawyers will work with you and do the haggling for you. These companies typically charge you a start-up fee, a monthly fee, and a percentage of what you save (or percentage of the overall debt).

Debt settlement is not like consumer credit counseling or debt management companies. The goal is to settle the overall amount of the debt by 40% or more. Consumer credit counseling and debt management work on reducing the interest and the monthly payments and not the principal balance.

Which means in the long run that you are still paying the overall debt plus any charges, fees, and interest. The theory is that debt settlement attacks the principal balance of the debt and reduces it by 40% or more. This means that you will only pay out 60% of the debt and save 40%.


Debt Negotiation - Debt Settlement is Recommended:

For consumer that have the financial means to settle their accounts rather quickly with lump sums and are not worried about the impact to their credit (credit can always be repaired later). Overall, debt settlement companies can save you 35 to 45 percent (including all fees) of what you currently owe. Debt settlement programs should not exceed three years (to be out of debt safely).

It is possible to settle you own debts without the use of a debt settlement company. Debt Advisory provides its members with the techniques and procedures that they need to negotiate your own debt. Debt settlement can be a hard and frustrating process. But it is possible to save 50% to 80% of what you owe, if you settle your debts on your own.

Debt settlement has its pro's and con's. Be sure that you are aware of all the legal and tax implications before you join a program. You must also realize that your credit rating will hurt during this process. Lastly, use the same thinking that you would use for CCC or Debt Management. Ask a lot of questions. Be sure that the company can be trusted and check out their BBB Report, and check with the Federal Trade Commission & States Attorney General's Office.

Explore a career in Professional Debt Arbitration
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