Payday Loan Consolidation

You are having financial problems and do not know what to do? Had taken several payday loans and are having trouble repaying them? How do you get out of this financial woes? This article may be of help to you. Here you will find information about payday loan consolidation which is probably one of the best ways to get out of the payday debt cycle. We will walk you through every step of the payday consolidation procedure and make it easy for you to understand. It is important that you know you are not alone in your financial troubles and there are payday loan consolidation companies out there that can help in these difficult times.

When you should use payday loan consolidation

When you should use payday loan consolidation

When you should use payday loan consolidation:

You want your paycheck to be only for you

One downside of a payday loan is that your creditors can garnish your paycheck. That means every month, they will receive a part of your wage because you have not repaid them. The size of your debt grows incredibly fast once you fall behind on your payments. As a payday loan is a high-risk loan, it comes with high interest rates and penalties fees. That means those monthly cut from your paycheck can last very long time if you do not take any action to get rid of your debt.

You do not want to pay high payday loan interest rates

As you may already know, a high-risk loan payday loan has high interest rates. What you may not know is that if you take a payday consolidation loan, that will change. With a payday loan consolidation loan, you will be able to repay most if not all of your other debt. In the end, you will only have to pay one interest rate – the payday consolidation loan interest rate and it will usually be  lower than what you used to pay for multiple payday loans you had before.

You are sick of being stuck in the payday loan cycle

Have you ever tried to repay your payday loan with another payday loan? You are not the only one. In fact, it is kind of addictive because of the immediate relief a payday loan gives. The thing is, it is a temporary solution which in fact creates a much bigger problem. Sooner or later, you will realize that you now have multiple payday loans. At that point, it seems impossible to get out of this and you start to feel pretty desperate. However, payday loan consolidation may be able to help you.

You are finally ready to have your financial situation under control

You need to decide is that you will have to gain control over your financial situation and make your monthly repayments. Payday loan consolidation can make your life easier in the sense that you will only have to make a single payment every month and the amount and interest rate will be lower. However, you will still need to be able to keep up with it. There are various programs and you can consult with a professional to choose an option that matches your personal financial situation. Have the courage to start getting out of financial trouble today.

How payday loan consolidation works

How payday loan consolidation works?

How payday loan consolidation works?

To understand how payday loan consolidation works, we have divided it into several simple steps. Stay well-informed and motivated.

Get to know the process of payday loan consolidation and make sure you completely understand it.

You can find a lot of information online. If you still have problems with some of the details, you can try consulting a professional. However, you want to make sure that you are consulting a third party who will provide you with honest advice and realistic valuable information. You have to be critical of everything you read or hear. Your third option is to discuss the loan consolidation process with people who have already gone through it. They can provide you with good first-hand experience. However, you should have in mind that each person’s story is different – they would have different debts or have used a different payday loan consolidation companies. You will have to compare the differences and similarities and evaluate the situation accordingly.

Decide if loan consolidation is the right option for you

There are three payday loan relief options disposable to you – payday consolidation program, a consolidation loan, and a payday loan consolidation loan debt settlement. They function very similarly but there are some differences you might need to know when deciding how to proceed. Here is how you can compare them:

–    In relation to what each of them does. Without going into too much detail, a payday loan consolidation debt settlement reduces the number of your total debts, while  payday consolidation program reduces the interest amount of your debt. A payday consolidation loan simply transfers your current debts to one different lender. All three options transform your multiple debts into a single one.

Decide if loan consolidation is the right option for you

Decide if loan consolidation is the right option for you

–    There are different payoff periods for every option. They vary from as short as a year to as long as 30 years. You could say the shortest version is  payday loan consolidation debt settlement which normally takes between 18 months and four years. It is shortly followed by a debt consolidation program which has an approximate length of between two and five years. Although payday consolidation loan may seem as the longest version and therefore not so desirable, it is exactly the opposite.

It is true it can take somewhere between one and thirty years but it all depends on how much money you have and how much you are willing to pay. It is entirely up to you how long will it take. There is not anybody else telling you how you should do it. That is not the case with the payday loan consolidation loan debt settlement and the payday consolidation program where you have strict rules about how you are supposed to repay and you are obliged to follow them. Naturally, this can get harder and harder to do in time.

–    Another factor is how you are supposed to make the payments to your creditors. With payday consolidation program and payday consolidation loan, you have to make monthly payments. On the other hand, with payday consolidation loan debt settlement you have to make one lump sum payment. The thing is in order to collect that lump sum, you will have to open a special saving account a put money in it every month.

So there is not really that much difference in this section. The only benefit you are getting with all the three options is that monthly payment will be the only one in opposition to you having to make monthly payments to all of your creditors on all of your multiple debts with different interest rates. Therefore, you might actually save some money by choosing one of those options.

–   At that point, you might ask yourself what are the requirements they would want you to meet. As already stated with payday consolidation loan debt settlement you will have to save the amount you will need before the settlement. The payday consolidation program will require you to make monthly payments and payday consolidation loan works with a collateral (which funnily enough does not change its nature as an unsecured debt, which is a little detail you should have in mind)

–    The last but not least important thing is the result these three options have on your credit score. With payday consolidation loan debt settlement your credit score will drop initially, while with both payday consolidation program and payday consolidation loan it will continue to drop gradually.

Generally, whatever you chose will help you improve your credit score and keep it better because they are designed for you to keep up with your payments and get out of debt. Both those things look good on a credit score and you want to have a good credit score as it is very important for many areas of your life.

In conclusion, you want to use payday loan consolidation debt settlement when you are looking to settle your debts rather quickly for less money and pay them all at once or in other words to just get it over with. Payday consolidation program is the best choice for you when you are looking to make cheaper monthly payments with a lesser interest rate amounts. If so, that is your thing.

A payday consolidation loan is a very good solution when you get approved for one. It might be your thing if you are able to pledge a security as a collateral. Consider your options very carefully and take the first step towards a life with fewer debt troubles in it today.

Talk to your payday loan consolidation company and share with them your financial troubles

In any case, you need professional help so let them help you. It is important to not to give up throughout the process. It will all work out eventually.

Get the legitimacy of your payday loan verified

You want to make sure that everything is legal. So do not miss out this step.

Receive a repayment plan that takes your personal situation into account and is affordable to you

With a viable repayment plan, you should be able to repay whatever it is that they are offering you and it is up to you to negotiate it correctly.

Monthly payments that come with payday loan consolidation?

This varies from case to case. There are several factors influence  the amount you have to pay each month. Those include but are not limited to:

  1. The exact number of debts you have and amount
exact number of debts you have and amount

exact number of debts you have and amount

There are different ways in which you can use payday loan consolidation. For example, if you have ten debts but you have managed to stay on payment on top of four of them and you want to keep it like this, you can choose to consolidate the other six payday loans. That way instead of ten, you will have only five debts – four you are managing to deal with anyone and a new one with a lower interest rate and in some cases even a lower monthly payment.

You may also want to consider consolidating all your payday loan debts at once. Depending on how overwhelmed you feel with the situation, that just might be your option. Having simply one debt instead of ten with different creditors will definitely make you feel less stressed and can help you get out of debt sooner than you expect.

  1. Will your lenders be willing to reduce their interest rates

Now, that is a tricky one but there is really not much you can do about it. What you need to know is that before taking out your payday consolidation loan, you should talk to your creditors and try to negotiate with them. If your relations with them are extremely bad, you can consider finding a professional to do it for you.

It is important because if none of your creditors agrees, you are losing an important advantage of the payday consolidation – the reduction of the interest rate. However, even in that case, payday loan consolidation still has benefits to offer- you will have fewer creditors, subsequently fewer payments calls and you will have only one payment to make which is always much easier to do. Try to get the best out of the situation you find yourself in.

  1. How much you can afford to pay
Make sure you are well aware of your current financial situation

Make sure you are well aware of your current financial situation

Naturally, the goal is for you to get help. Therefore, a payday loan consolidation program is trying to make sure you do not sink further into financial problems. Make sure you are well aware of your current financial situation before you talk with them for ultimate results. Make a list of all our debts and late payments. After you have finished with that, make another list consisting of all your disposable sources of income. In addition, you will need a third list with all the expenses you simply cannot live without such as expenses on food, clothes and utilities. When you have prepared all of that, you can discuss at length with your payday loan consolidation company what would be appropriate for you and how they can help you.

Normally, they will take into account all the information you have given them so it is important you have all your data correct. Be careful with the details and if any point you find you have made a mistake, contact your payday loan consolidation company and let  them know before it is too late. It sounds like a lot of work,but if you do not want to have financial hardships in the future, you should do such lists on a regular basis. This way, you can have control of your budget and make get into the world of planned household budgeting. If you can do it, it will be very useful for you as it can keep you out of trouble.

How you can get out of payday loan debt

This is a tricky question and you should be aware that the answer depends on several factors. First of all,  which state you are living in is very important. That is so because regulations vary from state to state and a certain option available in one of them may not be available to you if you live in another state. Secondly, it matter how many loans you have and how much debt you are in.

Another thing you should bear in mind is that it is important whom you have borrowed money from because different creditors have a different attitude towards your repayment of their debt. Some may disagree with the conditions of the option you have chosen as most appropriate for yourself. Although payday loan consolidation will most probably work out for you just fine, you need to check the things stated above and see how they apply to your case.

What you need to know before you take out payday loans online

What you need to know

What you need to know

Getting a payday loan consolidation is certainly very tempting. However, before you rush into it, there are a couple of things you need to do. First and foremost, you want to make sure you have found the right company to do business with. How should you do that?

  1.    Check if the online debt consolidation has a physical address as well
  2.    Try to see what kinds of reviews the payday loan consolidation company has
  3.    Make sure the company you have chosen has a fee structure that can easily match your budget
  4.    Check what state and federal regulations there are in regard to online payday loans
How should you deal with your payday lenders

There are two really harsh steps your payday loan creditor can take towards you- first, they can garnish your wage and second, they can send you a court summon and sue you. If you have more than one debt it is possible at some point you have to deal with both those things at the same time. What should you do? There are some steps you can take

  1. When creditors deduct money from your account with an authorization

You can take a series of actions in this case. First, inform both your payday loan creditor and your bank of your disapproval. Second, revoke the authorization. Third, change the location of your money. In other words, transfer them to another bank account. Open a new one if necessary. After all of that talk to the person who has lent you money and try to clear out the situation. The best case scenario is if you use payday loan consolidation and pay off this debt completely. An alternative would be for you to beg him for a repayment plan to which he may not agree. So do the smart thing and get payday loan consolidation.

  1. If you have received a court summon

Unfortunately, at that point, there is not much you can do. The best piece of advice we can give you is – answer it! It is never a good idea to ignore court documents.

Normally, it will activate a much more complicated and longer procedure if you do not. In any case, things can get worse. You should know that if you do not show up in court, you creditor will get a default judgment. Meaning, he will win the case for no other reason than you failing to show up for the hearing. You do not want that to happen. Do not be afraid and just go there.

If it is possible try to talk with your creditor before things go to court. You might be able to reach a settlement with him in advance. That will save you both court expenses and is the sensible thing to do in this case. However, try to approach him carefully as it is a very delicate situation.

What loan consolidation traps you may fall into and how to avoid them

how to avoid loan consolidation traps

how to avoid loan consolidation traps

You need to know there are laws regulating payday loan consolidation and similar activities. There are special institutions that watch over what is happening and are trying to help you. Their job is to catch when there is a break in the system and fix it through an improvement in litigation.

In payday loan consolidation, Consumer Financial  Protection Bureau (CFPB) is the institution responsible for all that. There are two main ways they try to interfere in the process in order for you not to fall into some of the most common traps that usually come with payday loan consolidation through prevention of scams and through protection of you as a customer.

What you should know is that there are some new rules which the Bureau has proposed. There is  constant change in the area but sometimes it takes a long time to put the new regulations into action. Make sure you have sound the last active version of the relevant regulation you need. There is plenty of information on the Consumer Financial Protection Bureau (CFPB) webpage. Check it regularly and make sure you are on the safe side when dealing with your money and debts. Good luck!

 

Payday loan debt settlement – how to use it correctly

In this article, you can find information on what is a payday loan, when and how it should be used, the dangers that usually come with it. You will also learn what is a payday loan debt, a payday loan debt settlement and when is the right time to get one. In addition, you will find useful  information on how to stay out of unnecessary trouble in the future and maintain a good financial situation.

When can a payday loan be useful?

easy solution to a bad situation

easy solution to a bad situation

For everybody comes a time when things get very complicated financially. There are many reasons that can bring you down – you can get sick, lose your job or a beloved one. After such tragedies when the time comes for you to pay your bills, you might find it impossible to manage them at the moment. The situation is overwhelming. However, there is a way out- a payday loan. It is quick, cheap and has almost no requirements. You can get it any time, even on the Internet. A payday loan is a fast and easy solution to a bad situation.

What is the problem with payday loans?

In some cases, payday loan turns a relatively small problem into a very big one. How does that happen? It is like an avalanche. You take one loan to cover one debt and then another loan to pay back the first one. However, this payday loan circle can continue forever. It means that you will never be out of debt. Another thing is that payday loans have extremely high-interest rates and in most cases penalties payments as well. Consequently, if you do not repay your payday loan during the first payday period, it is going to be growing rapidly. If you reach that point where you have multiple overdue payday loans, you might find it very hard to deal it. However, there is a way out of this situation and it is payday loan consolidation.

What should you know about  payday loans?

What should you know about payday loans?

What should you know about payday loans?

First of all, a payday loan is an unsecured kind of loan. There are two types of loans in general – secured and unsecured ones. Unsecured loans hide a higher risk for the borrower. For that reason creditors are more persistent  when it comes time to collect what  is owed to them. It should be noted that payday loans remain unsecured even if they are linked to your wage. Meaning, in some cases, your wage can be used by the creditor for the repayment of the debt but even in those cases, the loan would not be considered secured. A classic example of secured loans are mortgages.

Second, payday loans are short-term loans. That means you are supposed to repay relatively fast in comparison to a mortgage which can go up to twenty years ahead in time. With payday loans, you usually have few months to pay back. Otherwise, penalties come into force.

Payday loan has many other names. It is also known as a short-term installment loan, payday advance, salary loan, payroll loan, small dollar loan, short-term advance loan, cash advance loan. All of those give you little bit more information about what the essence of this loan is. It is meant to cover everyday expenses for a short period of time after which you have to repay it.

You should know that litigation on payday loans vary within the country. The regulations are different in each State. There are even some jurisdictions that have forbidden payday loans entirely. That means it will be illegal for people or organizations there to provide such a loan. Be careful and check your State regulations in detail. It might take some time and reading but it saves further troubles in the future. If you are not sure you can do it on your own, you might consider consulting a professional. There are many different approaches to payday loan regulations. Some jurisdictions have very few restrictions on payday lenders, while others have imposed limitations on the annual percentage rate (APR) in order to prevent it from being misused. Payday loans are normally regulated by the Uniform Small Loans Law (USLL).

How to calculate annual percentage rate?

How to calculate annual percentage rate?

How to calculate annual percentage rate?

Payday loans have many downfalls. However, among the worst of them is their percentage rate. There are many different ways to calculate the payday loan percentage rate. When there is a restriction in order, the norm is between 36 and 40 percent. However, in some cases, you can see numbers such as 391 % varying up to 3733% or even more. This can be a problem. In addition, it is hard for an average person to do the math. Especially when the current  financial situation requires a fast solution, there is rarely enough time to think things through. The pressing need of money makes it hard for a person to foresee the outcome.

A payday loan is very tempting when you are faced with a financial crisis. However, you should be aware it does not come without a risk. Although when used correctly it can be harmless, that is rarely the case with this kind of loan.

Interestingly enough though there are some studies that show that payday loans do not carry a more long-term risk for you than other forms of credit. That is of course after you deal with the huge short-term trouble they cause. To achieve that you need to find an appropriate payday loan consolidation service. It is the payday loan consolidation company that can help solve any problems resulting from taking a payday loan and falling into a huge payday loan debt. It is the best solution out of the complicated situation.

How to use payday loans correctly?

How to use payday loans correctly?

How to use payday loans correctly?

If you have a good budget plan and some reasonable amount of savings, you are not supposed to ever need a payday loan. However,  everybody has hardships from time to time. Regardless whether you are usually very organized and plan ahead you finances or you just seem to be unable to get a hold of your financial situation, there will always be a solution for you. It might not always be very easy but eventually, you will get out of any trouble.

When you start having a bit of a rough time with your daily expenses, you can get a payday loan and cover them. If you for some reason do not manage to repay that payday loan, there will always be a payday loan consolidation company. People working there will be more than happy to cope with your situation instead of you. They will negotiate with your creditor and reduce the amount you owe.

They will also come up with a plan so that you can collect enough money to pay. Just stay calm and things will fall into places. If worry too much about your problems that will not solve them faster. You need to take certain steps to keep you head above the water and everything will be fine. Luckily for you, there are already programs that have prepared those steps for you and have made them as easy to follow as humanly possible.

What is a loan shark and how to stay out of trouble?

What is a loan shark and how to stay out of trouble?

What is a loan shark and how to stay out of trouble?

A loan shark is a person who offers loans at extremely high interest rates. The payday loan can also be provided by an entity or a company. The term is usually used for illegal activity as in most cases there is legal regulation as to how high the interest rates can be. However, when there are not such regulations it can refer to predatory lending. A payday loan is a textbook example of this phenomenon. In most cases a loan shark would use blackmail, threats or even violence to collect back their debt. They are part of a very high-risk business and if they do not use those techniques, they might never get their money back.

However, that is very dangerous for you as the person who borrows the money. Blackmail and threats are also illegal and they can violate your personal space and freedom. In addition, they raise reasonable fear and require a very careful response. You need to protect yourself against such attacks. The best way to do that is by taking appropriate legal measure.

In the United States, there is such a thing as a non-standard lender. Non- standard lenders have occurred to “help” borrowers who would not classify for a loan from mainstream sources. They have received a license to give loans to those people. They have a smaller business and in most cases operate in cash. That is a significant difference from mainstream lenders that would normally not serve clients that do not have a bank account and will generally provide their services predominantly or exclusively online. A payday loan is one of the most popular methods used in connection with this type of finance.

The important thing to know is this service is legal and has reduced the amount of similar illegal practices by a loan shark. However, some of the borrowers in those cases have been accused of using oppressive or exploitative methods. Therefore, you need to be very careful. One example of a popular payday scheme would be when the borrowers try to charge an inflated “service charges”. They claim that is for cashing a paycheck. That is not correct because the only thing they allowed to charge is interest of your short- term loan. However, that interest with payday loan can reach outrageous amounts.

In addition, have in mind, there are regulations in regard of the chargeable fees and you are provided certain rights by the State. The law protects you and you just need to know how to use it correctly. Do not make any rash decisions. Stay informed and be aware of  the actual situation. In the long term, the more you know about how all methods in the area work, the better your financial situation will be.

How to find a way out of payday loan debt?

How to find a way out of payday loan debt?

How to find a way out of payday loan debt?

There are a couple of ways out of payday loan debt. At first, you can try to achieve a payday loan consolidation through taking another loan to cover the first one partly and therefore reduce the penalties that keep coming. That might work for a while but later on, you will need an actual general solution to the problem. That is when you should look for the services of a payday loan debt settlement company. If you are not sure what they do, you can find detailed information here.

What is a payday loan debt settlement?

A payday loan debt settlement  is a service provided by certain companies. In its essence, it is a program divided into several easy to deal with steps. The goal of the program is to eventually get you out of your payday loan debt. A payday loan debt settlement is also how the agreement that your payday loan debt settlement company reaches with your creditors in regard to the amount of money you owe them.

How does a payday loan debt settlement work?

  1. You decide that you need professional help to deal with your payday loan.
How does a payday loan debt settlement work?

How does a payday loan debt settlement work?

Payday loan debt is very specific in a way that you think everything is good until it is really bad. It is a short term loan, the amount is usually not that big and you feel you can easily deal with it when the time comes. However, something comes up and you don’t manage to pay on time. That is the moment your debt starts to grow, creditors start calling you daily, you receive e-mails from then.  

After that your creditors impose a garnishment on your wage, consequently, your disposable income is less, you might start having problems with other payments you should make. And on top of that, you receive a court summon. It is time for you to realize you cannot cope with that situation on your own anymore. You need professional help. Take the decision and make a step in the right direction – connect a payday loan settlement company.

  1. You find the right payday loan debt settlement company for you

There are many payday loan debt settlement companies. It is one of the good things about the market economy in the United Stated – you have a choice. You have a variety of option. However, the problem with having a choice is that you should be cautious what you chose. Unfortunately, there are same scam payday loan debt settlement companies as well. Make sure you make a background check before you start doing business with anyone. Research them on the Internet and through any other method available to you.

  1. You discuss your current financial situation with your new partners

Despite the difficulties of actually finding a good payday loan debt settlement company, once you have one, the hard part it almost over. From now on you will always have a trustworthy professional on your side to help you deal with the financial problems you have. You contact whichever payday loan debt settlement company you have chosen and arrange a meeting with them. At first, you will generally discuss the hardships of your payday loan debt situation and after that, they will offer you a repayment plan, you have to stick to. It will include monthly payments which to be used for your debt, the payday loan debt settlement company fee and any additional fees that may occur. For example, the bank fee for your special saving account.

  1. You open a special saving account
You open a special saving account

You open a special saving account

This step is necessary and not optional. You need a separate bank account in order to collect enough money to pay whatever the new amount of your debt will be. According to how much you agree to save, your payday loan debt settlement company will perform the negotiations with your creditors. The quicker you manage to collect that lump sum, the shorter the payday loan debt settlement procedure will be. That is in your favor. If the procedure is not very long, you will have less interest to pay and fewer penalties. The standard length of a payday loan debt settlement procedure, however, is between three and eighteen months.

  1. Your payday loan debt settlement company starts negotiating with your payday loan creditor

In this step actually, you do not have to do anything. Your payday loan debt settlement company will do it for you. You pay them in order to have less trouble for yourself. Let them prepare for the negotiations. It is important to remember that you pay the payday loan debt settlement company only after they have finished their job successfully and not beforehand. If they do not manage to bring what they have promised, if they do not reduce or do not settle your payday loan debt with you payday loan borrower, you do not have to pay them. Make sure you do not say any document that says otherwise. In some cases, it is even illegal for the payday loan debt settlement company to request their fee to be paid in advance.

  1. Your payday loan debt settlement company reaches an agreement with your payday loan creditor and make a payday loan debt settlement

This is yet another easy to follow step. In this case, again nothing is required from you. You just need to read carefully the paperwork and maybe sing in few places.

  1. You pay your payday loan debt settlement company for the service they have provided you with

In most cases, the payment of the fee of the payday loan debt settlement company will come out of the special saving account you have for the whole procedure of the payday loan debt settlement. In any case, the amount of the fee will be known beforehand – from the moment  you negotiate it with your payday loan debt settlement company at your very first meeting. You will have more than enough time to prepare for that payment. Plan it in advance and there will be no financial troubles.

  1. Your bank account operator pays your payday loan creditor the lump sum agreed upon in the payday loan debt settlement

The special saving account you open for the payday loan debt settlement procedure will be operated by the third independent party. That means it will not be operated by you or your payday loan debt settlement company. It is your bank account operators to make the payments to the payday loan debt creditors once the negotiations have finished. You should be aware of those facts and know it is how the procedure works. If everything goes as planned, you do not need to take any actions in that step as well.

  1. The program ends and as a result you are out of payday loan debt.

That is actually the best step. All you need to do is enjoy the freedom and the relief of having your debt settled. That was the goal altogether.

You can see for yourself those are very small and very easy to follow steps. You should have no problems with the procedure, it is meant to help you. It is created in such a manner so that it is useful and effective.

What is a payday loan debt settlement company?

A payday loan debt settlement company  is a body built up of people who professionally deal with debt. Their job is to settle your debt with your creditor and make it go away. They do that on day to day to their basis. A payday loan debt settlement company provides expert services for a certain fee. It is a small price for what you get in return and in any case it is much cheaper than any other option you have.

How to avoid making a mistake with you payday loan debt settlement?
How to avoid making a mistake with you payday loan debt settlement?

How to avoid making a mistake with you payday loan debt settlement?

Payday loan itself hides many risks. Although payday loan debt settlement is a way out of some of them, it comes with a certain amount of danger as well. We provide you with three simple steps that if followed correctly should manage to keep you out of trouble. Be cautious and stay on the safe side. Here is what you can do about it:

  1.  Choose your payday loan debt settlement company very carefully.

It might seem like a small step that you do not really have to put that much effort into, but it is actually the most important one. You want your financial troubles resolved as soon as possible. However, do not rush into choosing the first payday loan debt settlement company that crosses your sight and makes big promises! Listen to what they are really proposing, evaluate whether it sounds reasonable and realistic.

The last thing you need is for them to outplay you instead of helping you. It is best if you can check whether there are any complaints against them and if their previous clients are satisfied with the service they have received. Research as much as possible and make an informed and educated choice! The success of the how payday loan debt settlement procedure is in choosing the right company. The right company is the one you can trust and which understands your needs.

  1. Make sure your rights are not violated

There are several ways your rights can be violated by the payday loan debt settlement company in the payday loan debt settlement process. First, you have a right to be informed. Your payday loan debt settlement company should explain everything in a way you can understand. They should also provide you details about any complications and extra fees that may occur. Second, you have a right to pay after you have received an actual service. Do not fool yourself into paying anything you do not actually owe. Thirdly, you have a certain right to privacy. There are regulations when and how much your creditors can bother you. It is up to you to make sure your rights are protected.

  1. Know what the relevant laws are and learn how they should be applied in your case

This will provide you with a certain strength. You maybe wonder how come and why is that important? It is very simple, information is power. When used in the right way, laws can be very useful. Sometimes even a simple treat to sue said at the right moment can have an enormous effect.

In most cases, it is mutually beneficial for both sides the dispute to be settled outside the court because sometimes it is hard to say you will win at the end and there are a lot of legal fees that can be avoided. Therefore, do not underestimate the legal protection the state has provided you with. Instead, learn how it works and uses it in your own favor.

Payday Loan Consolidation Benefits

If you have fallen into a payday loan debt trap, there are not many things you can do to get out of it. However, payday loan consolidation is an option. We have prepared a list of its advantages which may work for you. You may most probably like to consider using payday loan consolidation if you are eligible for a debt consolidation loan. It is probably what you need to take out if you have a lot of payday loans debt.

Payday Loan Consolidation Benefits:

1.   Reduces stress
Reduces stress

Reduces stress

It is a good solution to a long lasting problem. Payday consolidation loan is a known stress relief tool that has an almost immediate effect. You may not always notice it but constantly worrying about your upcoming payments makes you anxious. It may affect your personal relationships since being stressed affects the way you treat your loved ones. In addition, it can negatively undermine your performance at work. A workplace is normally a stressful enough environment. When you get the extra stress of having to deal with numerous debts, it is close to becoming unbearable. That is really unnecessary when you can easily get all this negativity removed from your life. You should consider taking out a debt consolidation loan and you will see the change in your day-to-day life.

2.   It is easy to achieve
It is easy to achieve

It is easy to achieve

Payday loan consolidation works in a simple way. All you need to do is take out a debt consolidation loan. It serves to pay off all your accounts with creditors or in other words, it is used to consolidate all your previous payday loans which you can’t repay. A debt consolidation loan can be used for other kinds of debt as well. Payday consolidation is still the thing you should do, even if you have a bad balance on one or more of your credit cards. That way you will repay the multiple debts and the only thing you have to manage is the debt consolidation loan. Although it is better not to owe anything, it is still a much better option to have just one debt than have several of them.

There is one major benefit of having a single debt. There is just one deadline, a single creditor and most importantly, a single monthly payment. You do not have to receive multiple calls from various creditors anymore and do not have to pay a different debt every day of the week.

Apart from worrying less and being tormented less by creditors, it actually becomes easier for you to repay this one payday consolidation loan. Why is that? It is because now you can focus on it. You can plan your budget as you know all debt payments ahead. On top of that, your monthly payments that are due may actually be much smaller since you may have a longer time to fully repay the debt consolidation loan.

3.   It is useful and strategic to lower your interest rates
It is useful & strategic to lower your interest rates

It is useful & strategic to lower your interest rates

It is one of the best things about payday consolidation loan – it can actually save you money. How does it work? Because you do not have multiple debts after you have taken a payday consolidation debt, there is only one interest rate now and that would be your payday consolidation debt interest rate.What you win by getting a payday debt consolidation loan is a more reasonable, lower interest amount. That not only save you money on your monthly payments but also throughout the whole duration of the loan. Besides saving from a lower interest rate, you also need to get strategic with your finances. It is very important to plan ahead. Being prepared with a solution is always a good idea.

4.   It stops calls from debt collectors
stops calls from debt collectors

stops calls from debt collectors

A debt collector is probably everybody’s nightmare. It is definitely the last thing you want in your life. If you did not manage to repay what you owe within 180 days from the original deadline,  you creditor will turn your account to a collection agency. That is when hell begins for you. You will be receiving multiple e-mails and letters and daily calls even at work and calls at night. A payday loan consolidation could be your solution to end all those harrassement. Take out a single loan to repay all those outstanding balances.

Tip: Check out what state regulations are imposed on debt collectors and make sure you know your own rights. Their actions are regulated by the Federal Trade Commission (FTC). There is a Fair Debt Collection Practice Act (FDCPA). It covers certain kinds of debt such as family debt, personal and even household debt. In some cases, creditors may be forbidden to call you between 10 p.m. and 8 a.m.

That will definitely help you get some much needed  sleep at night. Another thing is that debt collectors may even be forbidden to call you at work if they know that it causes problems at work and your boss opposes it. Make sure you do not give up too easily and do not make yourself an easy victim. The federal regulations apply to everyone, regardless whether it is a debt collection agency, a lawyer who provides such a service on a regular basis or the notorious companies out there that go and buy delinquent debt. Harassment (whether verbal or physical) and false statements are strictly forbidden.

5.   It improves your credit score
 It improves your credit score

It improves your credit score

We all know how important credit score is and how hard it is to maintain a good one. There are just so many things that can have a bad effect on it. Having unpaid debt is one of them. That is especially true when you make late payments. Having multiple debts makes the situation worse. You may wonder what payday loan consolidation has to do with it. Well, a lot. The more debts you have, the easier it is for you to fall behind on some payments. That goes immediately on your credit score (and stays there for about seven years).

Then your credit score gets worse and worse every month. There is a very simple fix to the problem – take out a payday consolidation loan, repay all your other debts and have them marked as paid. That improves your credit score. You also need to stay on top of your payday consolidation loan payments. Through taking a payday consolidation loan you can rebuild your credit score over time.

In a nutshell, a payday consolidation loan could help you in many ways. Not only will it help you reduce the stress levels in your life and improve your personal relations, it will also make it easier for you to stay on top of your single monthly payment. In addition to all of that, it will get you rid of debt collector’s calls and help you maintain a good credit score.If you are dealing with multiple debts and are finding it difficult to deal with the situation, payday loan consolidation may just be the answer to end your troubles.

Payday loan consolidation – PROs and CONs

Payday loan consolidation is a rather popular way for people to resolve the problems they have from payday loans. Payday loan consolidation is very useful and practical and comes with a lot of upsides. However, there are also some details you may consider as negative and want to be prepared or at least know more about them. Here is a list of the top ten things you need to know before taking up payday loan consolidation.

Pros of a payday loan consolidation

 

  1.    It comes without an advance fee
 It comes without an advance fee

It comes without an advance fee

An advance fee is a fee you pay before you have received any actual service. In payday consolidation loans and programs, you are supposed not to be asked to pay such a fee. And for payday consolidation loan debt settlement, it is prohibited for the company to receive a fee before it has settled any debt for the client. Even then, they can only receive a part of their fee for the amount of debt they have settled at that stage of the process.

That is a big advantage for you because it guarantees that the service you received is really worth the money you paid. There are many scam schemes where a loan consolidation company would request for an advance fee. After you pay, they disappear. Therefore, it is really good for you that you  pay only after the company has helped you settle some debts for you.

  1.    No more high interest rates

Payday loans have  one of the highest interest rates. That is because they are high risk loans.It is the same with credit card debt. However, there is a way out of this. When you use any type of payday loan consolidation, you will get a lower interest rate. Of course, there are various factors that will determine the exact interest rate.

Some of them include how many creditors you have, your outstanding debt amount, what actions have already been taken against you (for example, have you received a court summon or is your debt transferred to debt collectors, a garnishment on your wage or does your creditor take a certain amount of your paycheck with a permission) and how willing are those creditors willing  to negotiate.

Bear in mind the lower interest rate comes for the payday consolidation loan is because of its secured nature and its attachment to your asset. Payday loan consolidation is the only option to settle your debt that has this benefit.For example, payday consolidation loan debt settlement reduces the overall amount of your debt.

3.  There are no extra fees for being late on your repayments
 no extra fees for being late on your repayments

no extra fees for being late on your repayments

One of the biggest problems with payday loans is they not only come with high interest rates, they come with punishments as well. When you are late on your repayments, you get punished twice for it – once through the high interest rate and a second time through late payment penalty fee. That makes it extremely hard to repay a payday loan as its amount increases very fast to unbelievable amounts.

It seems impossible for you to ever repay it. That is exactly when you need to use payday consolidation. Payday consolidation loan, payday consolidation program and payday consolidation loan debt settlement come without any extra fees and without any extra financial penalties for late repayments. This is yet another reason to choose payday consolidation to get you out of the payday loan cycle.

4. Payday loan consolidation reduces the probability of you getting sued

You might wonder  how payday loan consolidation makes the chance of you getting sued smaller. Well, it is pretty simple. Once you have used payday consolidation relief, you would have repaid most if not all of your debts. You will not have multiple creditors and you will be out of the outstanding debts you have as well. Therefore, your previous creditor don’t have a reason to sue you anymore. Of course,  some of your creditors may have already started a court procedure and are unwilling to drop it.

In those cases, you can try to contact them and negotiate with them. Explain what repayment plan you have and see how they will respond. There is a pretty good chance they will agree to what you offer because court procedures are expensive (there are court fees and additional attorney fees that may vary) and there is the chance they may lose. Therefore, it is actually in their interest to receive whatever they can from you.

  1.    The calls from your creditors will reduce or stop altogether
calls from your creditors will reduce

calls from your creditors will reduce

The whole idea of payday consolidation is to reduce the number of debts you have. In fact, the goal is to reduce the number of creditors you have. People can be very difficult to deal with especially when there is money involved. Each creditor requires a different approach and offered different conditions on his debt. Therefore, it is extremely exhausting and overwhelming to try to deal with them. On top of that, there are several ways in which your creditors can come after you. Some may limit themselves to just calls and letter (and e-mails). Plus, they can get you in trouble with your boss if harassment happens during work hours.

In addition, another group of creditors may try to sue you or garnish your wage. All of those are not in your favor. Loan consolidation  can stop all these. Once you have repaid your multiple debts, all those annoying creators have no reason to bother you anymore. Even though some of them may continue to call, you now have the legal right to request them to stop. Finally, you will have some peaceful time without calls from creditors.

Bonus: Your payday loan consolidation company is doing (almost) everything instead of you.

When you sign up for a payday consolidation program or a payday consolidation loan debt settlement program, it is their job. Basically, the company will deal with your debt and your creditors while you just need to stay on top of the monthly payments you have negotiated with the company you have chosen to work with. Most importantly, those payments would take into account your actual financial ability.

Cons of a payday loan consolidation

1. You need to avoid payday loans in the future

It is way too easy to fall into payday loan cycle again. Be sensible and avoid payday loans as much as possible.

2. You need to follow your payday consolidation company’s advice
three payday consolidation options in front of you

three payday consolidation options in front of you

three payday consolidation options

There are in fact three payday consolidation options in front of you – payday consolidation loan, payday consolidation program and payday consolidation loan debt settlement.

Payday consolidation loan is like any other loan you would take and you just need to keep up with your monthly payments.
Then there is payday consolidation program. It offers a plan to help you manage  to pay off your multiple debts. You will have to follow the advice of your payday consolidation program company. It is not something you have to worry about  because they are professionals and have developed these programs to help you.

The third option for you is payday loan consolidation debt settlement. It is in fact like other debt settlement. All that is required of you is to find a decent payday loan consolidation company and try to stay away from scam schemes. Payday consolidation loan debt settlement companies offer a legitimate service. First, they will discuss your financial troubles with you. Then they will create a personalized plan for you. It will include the fee, amount they think you can afford to pay for your debt.

That amount must be equal to what they think they can negotiate with your creditors. That is because they need to convince them to settle your debt for less than the original amount. On the other hand, you have to do is almost close to nothing and you get a lot in return. The bad thing, however, is that you really need to listen what your payday consolidation loan debt settlement company advise you to do. Otherwise, you might compromise the process because your actions may affect future negotiations with your creditors.

They will advise you to stop all payments to your creditors which might temporary damage your credit report. Therefore, it may be tempting for you not to listen to them. However, you should bear in mind that you have chosen professional assistance that has proven efficient  for many other people and there is a reason for their advice.

3. The procedure might be lengthy   

Efficient financial solutions require patience. Payday loans normally provide a quick relief for when the deadlines are approaching and you don’t have enough money to pay your bills. However, faster the solution, the less its effect last. The length of the procedure will depend on which of the three options you will choose. In the best case scenario, it is no less than six months or a year.

A payday consolidation program and payday consolidation loan debt settlement normally take between 18 months and five years depending on various factors such as how many creditors you have and how willing are they to participate in the process and how much you can afford to pay monthly. With payday consolidation loan, you are looking at one to 20 years. The good thing though is that you will have a lower interest rate and a monthly payment specially chosen to match your personal budget.

4. You may not be able to stay on top of your payday loan consolidation monthly payments
multiple payday loans

multiple payday loans

Unfortunately, that is an unavoidable danger. If you have multiple payday loans, you have to make multiple monthly payments. If you go for a payday consolidation loan, you only have to make a single monthly payment. If you chose payday consolidation program, you still get to make a monthly payment. With payday consolidation loan debt settlement in order for you to collect the money to make the single repayment, you have to make monthly payments for a certain amount of time. You can see the trouble here – in all those cases, there is a chance for you to fall behind on those payments. You just have a choice between the bigger and the smaller evil.

You have to evaluate which is a better option for you personally. The benefit of payday consolidation program is that the payment is just one as opposed to multiple repayments. That means one creditor, one relatively lower interest rate, one payment. The same goes for payday consolidation loan. A payday consolidation loan debt settlement offers one additional benefit – it makes all or most of your debt to go away forever for less than its original cost.

5. In secured loans, you risk losing your collateral

A collateral is an asset that you offer to the lender to secure the loan. That means that if you stop making your repayments, the creditor can seize your asset to cover his losses. That only applies to payday consolidation loan where a collateral is required. Because of the collateral, your debt offers less risk for the creditor and that allows him to give you the desired lower interest rate.

Conclusion  

Payday loan consolidation is a rather safe mechanism that can help you a lot. Although it comes with few pitfalls, they are not very dangerous or damaging to your budget and credit score. In fact, most of the risks are manageable. There is help out there which you can seek out. So stay informed, be prepared and shape up your financial situation.

10 myths about selling credit card debt

You are very much in debt and you want to get out of it? You are not the only one. In fact, credit card debt settlement is so popular that you can hear about it anywhere – on TV, radio and there are tons of articles about it on the Internet as well. With all that fuss, it is only normal that a lot of myths have been created around the topic of credit card debt settlement support. However, you want to stay on the safe side. Do not get tricked. We are here to inform you what you can trust about selling credit card debt and what not. In this article, you will find out the 10 most popular myths about selling credit card debt.

First, you need to understand what is credit card debt settlement and how it works. With so much information out there, it is easy to get confused. In fact, credit card debt settlement is not so complicated as it may sound at first.
There are also some terms which you need to understand. Here are some of them:

credit card debt settlement

credit card debt settlement

Credit card debt settlement  

it is the settlement arranged by your credit card debt settlement company with your creditors. Through that settlement, you get a reduction of your debt.

Unsecured debt 

it is a loan that is not linked to any underlying assets of yours. Credit card debt is an unsecured debt.

Secured debt 

it is the kind of debt  related to an asset you have. In most cases, it’s your car or your house. The way it works is that if you are very late with your payments or have stopped paying them altogether and have not contacted your creditors, you can lose your property. That is because your property serves as a guarantee for your debt and when you do not take care of your debt, your creditor can sell your asset (that is collateral for the debt) to get his money back.

It is called “secured” because there is a higher chance for the borrower to be able to collect his money and therefore the loan has a lower risk. The most popular one is mortgage which a type of secured debt related to your home. In some cases, you can even take out a second or third mortgage. However, in those cases, it will be for a smaller amount of money than the first mortgage.

Debt collector 

Debt collector

Debt collector

That is a figure that does not always appear when you have debt. When you have not paid what you owe for 180 days after it was originally due, your creditors pretty much give up on you. That is when they send your case to a debt collector.

Debt settlement companies 

Debt settlement companies are companies that fix your financial situation. For a certain fee, they negotiate with your creditors and help you collect enough money to repay your debt. They are your perfect partner for becoming debt-free.

Debt settlement attorney

Debt settlement attorney or debt settlement lawyer is a legal professional whom you can hire to provide the same service as a credit card debt settlement company.

Debt settlement letter

This is a general term for all kinds of letters sent and received by both your credit card debt settlement company and your creditor during the process of negotiation. You can find some sample letters on the Internet. Those include but are not limited to an offer letter, a counter offer letter, letter of acceptance of a verbal offer and others.

Lump-sum settlement 

Lump-sum settlement

Lump-sum settlement

This is the settlement you reach with your credit card debt settlement company. That amount is the amount you have agreed to put in your special saving account after several months. Only after you have this lump sum from the settlement, the negotiations with your creditors will start.

Debt relief service 

This is a general term that includes both debt settlement and debt consolidation (there is a slight difference between the two terms, mainly in who offers the service and how much it costs)

Credit repair

Most simply put it is a scam. Certain companies claim they can clear your bad credit report history for you. No one can do that unfortunately. The only thing you can do is go out of debt in the first place and try to maintain a better credit card record in the future.

10 myths about selling credit card debt

credit card debt settlement myths

credit card debt settlement myths

Now that you have an understanding of the basics terms, it is time to learn the truth about  debt relief service. Not everything you can read online is correct and correspond to the reality of things.

  1. Everybody can pay less for their debt for almost any reason or even without one

That unfortunately is not true. There is an underlying criteria that both creditors and legitimate credit card debt settlement companies should screen their clients. They should make sure that you meet the criteria before they do business with you.
People who are considered eligible are normally those who need credit card debt settlement due to temporary reasons. They have reached the point of being too much in debt. However, in some cases, people who just overspent may classify.

To sum up, although there is certain criteria there is still a high chance you might classify. It depends on many factors and it is an individual thing but you have to try. Our advice is to do a little research and try to find a credit card debt settlement company. See what they tell you and go from there.

  1. I can settle my credit card debt on my own

do not try to negotiate on your own

do not try to negotiate on your own

Many people are convinced that “it is not that hard and I can just negotiate for myself”. No matter what brought you to that thought – from I have always been good at negotiating to I do not have enough money to pay a credit card debt settlement company, you need to stop and think it over. Although hiring a credit card debt settlement requires you to pay for their services, you are getting a lot out of this deal.

First of all, these companies provide professional services. They have been doing this much longer and more successfully than you. The thing is – you do need outside help. Secondly, your creditors are more likely to speak to a debt settlement company than with you.

In many cases, credit card debt settlement companies have established relations with the creditors whom they have worked with in the past. It makes the whole process easier and faster. Make the smart choice and do not try to negotiate on your own. It will probably not work out the way you want.

  1. The only options I have are credit card debt settlement and bankruptcy

There are several options

There are several options

That is not exactly true. There are several options out there and you can find a complete list of them on our web page. They include self-help, debt consolidation, credit card debt counseling service, bankruptcy either under Chapter 7 or Chapter 11 of the Bankruptcy code. Many Americans think that filing for bankruptcy is not a big deal. In fact, it is an extreme measure and it should be taken with caution only when there is a real need. That is for example the case when you have tens of thousands of dollars of debt.

Not only is bankruptcy a really extreme thing to do, it is expensive as well. You have to pay stay fees and court fees and attorney fees. Bankruptcy is rarely the solution for your problems. The reason why this myth persisted is because bankruptcy is so popular in common language and movies. Debt settlement is by far the best option out there. It is the established way to fix your financial situation and it works. Although you know there are other options, you should also remember credit card debt settlement is probably the best one. It gives you a wanted result you cannot achieve otherwise.

  1. I have many other options better than credit card debt settlement

You do have other options but the thing is, they may not be better than credit card debt settlement. Once you compare the pros and cons of debt settlement with all the disadvantages the other options, it will become clear to you. Credit card debt settlement is probably the easiest, fastest and cheapest way to get out of debt. It is the reason why debt settlement is the established practice in the area.

  1. I have to pay in advance to the debt settlement company and they control my money

credit card debt settlement company does not control your money

credit card debt settlement company does not control your money

You should know that this is not always the case. Although previously credit card debt settlement companies were able to request for  advance payment, that is not the case anymore. Due to some changes in litigation, debt companies that use telemarketing (saying that they offer their services over the phone) are banned from collecting their fees in advance (meaning before they have performed any actual service for you). This rule is by the Federal Trade Commission and is in effect since October 2010. In all honesty, this is more one of the most common scams out there.

Moreover, the credit card debt settlement company does not control your money. You will be required to have a separate bank account to save the needed amount of money but that does not mean that the credit card debt settlement company controls your money. This approach has been chosen because it is the only way in which you can separate the money you need for paying your debts from the amount you use for your daily needs and other expenses. It is actually making it easier for you to reach your goal.

You should be aware that this account is actually supposed to be controlled by a third independent party (which all, by the way, is no supposed to receive a referral fee- that is another popular scam- more on what to be careful with while part of a credit card debt settlement procedure you can find on our web page). There is an important difference between myths and scams.

  1. Credit card debt settlement will hurt my credit card report

That is another myth. As every other financial operation credit card debt settlement will reflect on your credit report but it is a procedure designed to make you debt-free. Not owing money is actually good for your credit report. Thought the process you may have to stop making payments to some of your creditor temporarily and that might have some reflection on your credit report as well. However, this effect will be temporal and the end result will be that you are free of debt and have a good credit card report.

  1. If I do not reach a debt settlement, my debt will chase me forever

That is fortunately not true. There is actually a certain number of years after which your creditors cannot enforce your debt legally in court. That is regulated by the statute of limitations. You should have in mind that the number of years vary from state to state. However, if you have not paid for a certain amount of years, you actually do not have to anymore. After the limitation period has expired, you are under no obligation to pay to the creditor and he has no legal way to force you to. Any payment you make after that period means two things.

Firstly, it is completely voluntarily and secondly, it is not in your interest since it probably negates the limitation argument. The thing is that in order to use that option, you need to use the limitation argument on time (at any point after the period has expired). If you have paid voluntarily after that period, you cannot ask for your money back using the limitation argument. The thing is, you have not paid without a reason – your debt does not really cease to exist. It is just not enforceable in court anymore and therefore, you can skip paying it.
When the legal obligation goes away, so will the credit damage. Of course, that will only happen after seven years that is when the fact you have not paid will no longer occur on your credit report.

  1. When I am done with debt settlement, I will be completely free

some debts simply do not qualify for debt settlement

some debts simply do not qualify for debt settlement

Unfortunately, that is not absolutely true. The problem is not that credit card debt settlement companies make promises they cannot keep . The thing is, there are some kinds of debt that simply do not qualify for debt settlement. Those include but are not limited to student loans, alimony and child support or taxes. Even you file for bankruptcy, you will still have to pay them.

They chase you forever, especially taxes. You should bear in mind that even if you reach a really good debt settlement, your creditors will report it to the IRS which might consider the money you have saved from paying less as an income and therefore taxable. Do not worry too much as that is not always the case and there are a few exceptions.

  1. Using a credit card debt settlement company is very expensive 

Not to say it comes without a price, but you do not really have other ways to get out of debt for free. To start with, all the related services out there are paid. Hiring a credit card debt settlement company is probably among the cheapest compared to bankruptcy. With bankruptcy, you have to pay for filing the document, court fees and those are up to several thousand dollars. In addition, you will need to hire a lawyer to represent you in court and their fees vary. So with credit card debt settlement, you can at least make  your money worth.

  1. Debt settlement is a bad idea

In fact, credit card debt settlement is a well established practice. It is easy, quick and cheap. Although it has some pitfalls, it is probably one of the best ways to deal with your debts. The myth that debt settlement is a bad idea may have stemmed from the fact there are certain possible scams schemes out there. However, you can stay clear of those scams by simply being careful.  

Those are the 10 most popular myths about credit card debt settlement. You need to be critical of what you have read online. Credit card debt is hard to deal with but it can be settled and you can be debt-free.

Credit card settlement – the best way to get out of debt!

Are you deep into debt and searching for a way out? We are going to explore some options which may help you make the right decision. Needless to say, credit card settlement could be the best financial option for you – it is cheaper, easier and faster than any other alternative that you have.

How to know if this article is for you:

  1.    Have trouble paying your bills
  2.    Get scary and/ or annoying calls from your creditors
  3.    Worried you might lose your home
  4.    There is an actual possibility that your car could be taken away from you
  5.    Find yourself unable to support your family needs
  6.    Have most/all your accounts already turned to debt collectors

You are not alone in your financial troubles. Many people have money problems at some stage in their lives. The good thing is, you can overcome them. You just need to take action while it is still possible. Don’t let your financial situation get worse!

There are many reasons that could have led you to this point, from family problems, loss of a job to overspending. Whatever it is, your financial woes can be put to an end even though it may seem overwhelming at first.

The main factors that land you in your current financial state could be the types and amounts of debt you have, your level of motivation and ability to deal with the problem and your current and possible future situation. Take a look at some of the methods which could help you reduce or resolve your debt here.

What are the ways to get out of debt?

You might have thought there is only one way to get out of debt – to pay what you owe your creditors. However, sometimes debts could reach such unimaginable amounts that it seems impossible for you to pay them all off in this lifetime. What you need to know is that you have several financial options to solve the problem at hand.

  1.  Credit card settlement
     Credit card debt settlement

    Credit card debt settlement

    Credit card settlement is an established method to deal with your debt. The good thing about it that you do not deal with your creditors – the credit card debts settlement company does that on your behalf. In addition, their job is to make your debt go away for less than it actually is. Meaning that they will negotiate with your creditors and reach an agreement for a smaller amount. At the end of the process, you can be debt-free which sounds like a dream but it is a real possibility as that is what happens to a lot of people. On our website, you can find detailed information on how the procedure goes step by steps and the risks involved and how you can easily overcome them. Credit card debt settlement is probably by far the best method to get rid of your debt.

  1.    Self- help
Self help

Self- help

Actually, every step you take to resolve your financial situation is a self-help. This means you do everything on your own and do not get any professional help. It will take a lot of organization, devotion and planning on your own. One of the most important things is to stay realistic and be honest with yourself whether you able to do it on your own. If you believe in yourself, here is how to get yourself out of debt without seeking professional help:

–    Develop a budget

You should always start with having a very clear and realistic idea of how much you have and can earn against how much you spend. The best way to do that is to make a list of all the payments you have to make every month such as insurance, car payments, mortgages and others. The good thing about this is they are all fixed amounts and are easy to calculate. Then you have to also list expenses that are unavoidable, such as food, clothes or entertainment. Follow your spending habits to find your weak spots. Do not forget to include all your sources of income. The goal is to be able to make ends meet and pay all your debts.

–    Try to negotiate with your creditors

Try to negotiate with your creditors

Try to negotiate with your creditors

When you start really having trouble with repayments, it is advisable that you contact your creditors straight away. They might be willing to consider your situation and offer a modified repayment plan. The sooner you do that, the better it is.

Once your accounts have been turned to a debt collector, it might be too late. Your creditors might be unwilling to negotiate with you. In those cases, it is better when you get a debt settlement company which has more experience than you and may have established relations with some of your creditors. They may also be able to settle your debt for less.

–    Deal with your debt collectors

An important thing you should know is that federal law actually regulates when your creditors may contact you and they definitely cannot contact you during 9p.m. and 8a.m. In addition, they are obliged to respect your will if you have made a written request not to be contacted anymore. There are many other bans imposed on debt collectors as well – they cannot lie or use unfair practice when trying to collect their debt from you. Do not let yourself be bullied.

–    Manage your loans

Manage your loans

Manage your loans

There are two kinds of debt – secured and unsecured. Although unsecured debt is harder to go away, it does not mean you should not worry about your secured debt. Secured debt is normally tied to something you owe such as your car or your house. It is called secured loan because if you stop making repayments, your creditors can repossess your property.

Most automobile finance agreements have a clause to do it by default. Meaning they do not even have to give you notice in advance. It is almost the same with your mortgage. The difference is that you are facing foreclosure. Contact your creditors and check what options they are willing to give you. Make sure you ask if there are additional fees to pay.

Credit card debt is unsecured debt. So are medical debt and signature loans. They are not tied to an asset and have a higher risk for the borrower. Therefore, your creditors on those types of debt would be more eager to receive your payments and are more unwilling to negotiate with you.

  1.    Debt relief service
Debt relief service

Debt relief service

Debt relief services may be used as a general term relating to both credit counseling and debt settlement. Credit counseling is a not very good alternative to debt settlement. Although they seem alike in many ways and share certain similar steps, credit counseling has more pitfalls and does not offer the same end result as debt settlement.

In credit counseling, you merely get advice on how to deal with your financial situation by credit counseling organization. They offer their services through local offices, online or by phone. Trained professionals will look at your whole financial situation and work with you on a personal plan which will help resolve your financial issues. There is no saying how this may end – will you be left with more debt or be debt-free? Will you have a higher or lower credit card score? How will it affect your credit report? The question you really need to ask yourself is how much can you trust the advice you have received from those organizations.

Many say it is an advantage that those services are provided by non-profit organizations compared to credit card debt settlement companies which are pro-profit. However, what they do not tell you is that this does not mean their services are free. In fact, in many cases, they have very high fees or even request you to make donations to the organization.

  1.    Debt consolidation
 Debt consolidation

Debt consolidation

It is a somehow complex method of debt refinancing. It involves you taking up yet another loan to pay off many other. You might be able to achieve it through a second mortgage or a home equity line of credit.

A second mortgage, as the name suggests, occurs when the first one is still in effect. It will receive payments only after the first has been paid off. Therefore, its interest rate tends to be higher. Naturally, the amounts borrowed would be lower than with the first one. It can also last from one to twenty years but the shorter the period, the higher the monthly payments. It also comes with lending fees.

Another thing is that those loans require you to put up your home as collateral. It is how the borrower secures the repayment of your debt. It serves them as a protection if you do not pay. For you, that means that if you cannot make the repayments or in some cases, you are late with your repayments, you can lose your home.

A line of credit is a flexible loan from a bank. The bank will offer you a limited amount of money you can access as needed (in your case to repay your debts). However, you have to repay the bank – either immediately or over a specified period of time. It is something banks have started doing recently and it might not really work for you. You have to be very careful. Plan everything in advance on your own and pray for the best.

Debt consolidation is very hard to achieve and is not recommended. Even after this procedure, you will still be in debts. It is meant to only settle a fraction of your debts. It may leave you in a slightly better financial position, but you will not be debt-free and will still have a lot of payments to deal with, not to mention you credit report situation.

  1.    Bankruptcy
people who file for bankruptcy sometimes pay less

people who file for bankruptcy sometimes pay less

You don’t want to go there. Although bankruptcy can be an option, it has effects that will last long and are far-reaching. Bankruptcy information goes on your credit record and stays there for ten years. It is true that people who file for bankruptcy sometimes pay less because the court order may say they do not have to pay some debts. However, it can cause you many problems, for example, when you are trying to buy a home or life insurance.

In some cases, bankruptcy may even prevent you from getting a really good job because your future employers would want to see your credit record and a bankruptcy case is always a red sign. The thing with bankruptcy is that it is a legal procedure – it is the legal way to do it. Not to say that other options are illegal, but filing bankruptcy is what you are supposed to do when you have too many debts you can’t repay. Needless to say, it comes with many negative consequences as well.

There are two main types of personal bankruptcy. They are dealt with in Chapters 7 and 13 of the Bankruptcy code. You should not forget that these are very expensive legal procedures. Both types of bankruptcy must be filed in special federal bankruptcy courts. Meaning you will need an attorney to represent you. Filing fees are several hundreds of dollars and attorney fees vary depending on who you choose.

What is the difference between Chapter 7 and Chapter 13?

What is the difference between Chapter 7 and Chapter 13?

What is the difference between Chapter 7 and Chapter 13?

Simply put, one is straight bankruptcy (Chapter 7) and the other is not (Chapter 13). With straight bankruptcy, all your assets are going to be sold and the money gathered would be used for repayment of your debts. When we say all, you should know for the purposes of bankruptcy, certain assets are exempted. The state makes sure that you have enough left to sustain a minimum standard of living.

For example, your only home (if its cost is up to a certain amount. If it is too expensive, it may be sold and you can get a fraction of the proceeds to get a cheaper place to live in), some work-related tools in your profession or basic household furnishings (again depending on their value) can be exempt. Your property will be sold either by an appointed court official or turned over to your creditors.

There are also eligibility requirements for both Chapters you need to make sure you cover. In some cases, you will not be allowed to file under a certain chapter. That is because  an individual filing under Chapter 7 will get a discharge on debts and will no longer be liable for them. For example, before filing under Chapter 7, you need to satisfy a “means test”. However, bear in mind that the right to a discharge is not an absolute anyway (some types of debt are not discharged, such as student loans or alimony and child support) and you might not even get it.

What does Chapter 13 offer then?

Chapter 13 offers a more lengthy proceeding to give you a chance to keep some of your assets. In this case, the court approves a repayment plan which allows you to use your future income to pay back your debts. This plan usually varies between three and five years. You get to keep things you may otherwise lose such as your house that has a mortgage or your car. You don’t have to surrender any property under Chapter 13. After the procedure ended and you have made all the repayments under the court-approved plan, your debts will be discharged. However, do not forget there are eligibility conditions here too.

You still need to hire an attorney and pay them, pay for the procedure and court fees. Plus, you have to be paying constantly over five years. That takes a lot of financial commitment. Chapter 13 bankruptcy is unlike what you will get with debt settlement where the procedure is much faster, easier and cheaper. With debt settlement, you will have to make regular payments for only a couple of months.

Important things to remember
Important things to remember

Important things to remember

A very important detail about bankruptcy procedure is that you must get credit counseling. It must be with a government- approved organization and must be conducted within six months before you file for bankruptcy relief. You can find a list of such organizations at the U.S. Trustee

Are there any options you most definitely do not want to try?

When you are very much in debt, everything becomes a problem. At some point, all your options sound bad. Most of them come with many risks (sometimes avoidable, sometimes not) and uncertainty. However, there are scam options which you want to stay away from.

–    Credit repair

This is a service usually offered to people who have a really poor credit history. A so-called credit clinic claims that they can clean your credit report. Of course, this service is provided at a fee. First of all, be aware that there are federal and state laws forbidding any company dealing with debts to request payment of a fee before it has performed any kind of service to the client.

Secondly, it is impossible for them to legally do what they had promised. Some of them could falsify documents (an actual crime) and they can be sued under the Crime code. No one will take that risk for you for the fee you are paying them. The truth is, in most cases, they will request an advance payment from you and you will never hear from them again. Make an honest effort to repay your debts and improve your credit report.

Stay away from credit clinics – they have nothing to offer you. The things they can actually do, you can do them yourself for free. Contact a debt settlement company and get your debts settled soon.

–    Advance free loans

The companies who offer this service require you to pay them in advance. It is illegal for them to request for payment before they have rendered any service. You must be wary of those loan guarantees. However, some creditors offer an extension of credit through different means such as telemarketing. They require an application or appraisal fee in advance. While what they do is legal but they can never guarantee you will get a loan. The truth is no one can promise you that.

The legitimate service will not even claim that you receiving a loan is likely to happen (to be honest, if it was, you would not have to use their service, to begin with). In some cases, the fees these scam companies require vary from  a hundred to several hundreds of dollars. Do you want to lose your money over nothing? We guess not.

In conclusion

We tried to give you a complete overview of what lies ahead of you, downfalls and how to avoid them. We believe debt settlement could be the best option you have because it is efficient, fast and relatively affordable. As any other scenario, it comes with some risks but they can be easily solved. Stay informed and be careful when choosing your financial options.

Settling credit card debt – hidden risks and how to overcome them

When you are deeply in debt and searching for a way out, it might get overwhelming very quickly.  You may discover that there are credit card debt settlement companies that could help you in settling credit card debt. In fact, they offer to make your debt go away and they could do it cheaply. Truth is, there are some risks debt settlement. However, it may still be your best option out of crippling debt.

However, you should know that the good offer comes with some downfalls which you should take note of when making your decision. Rushing into something is never a good idea. That is why we want to help you make an informed choice in this article.

What are debt settlement companies?

What are debt settlement companies?

What are debt settlement companies?

Debt settlement companies offer debt settlement programs which normally consist of a series of steps. Their job is to negotiate your debts with your creditors and resolve them either in part or in full. They will reach a “settlement” with your creditors which is a lump sum payment that is less than what you actually owe. Of course, you still have to pay that lump sum.

You will be asked to put in monthly payments in a special savings account until a settlement is reached. It might sound tough to keep up with those monthly payments. However, when you are in debt, you have to pay back one way or another anyway.

Another thing is that debt settlements are typically offered by pro-profit organizations, meaning that they make money in the process. For debt settlement companies, it is a business like any other and it is not unusual to benefit from what they do.

Moreover, some debt settlement programs will request you not to make any payments to your creditors while you are part of the program. They might even ask you not to communicate with them in any way. Even though that might seem hurtful for you in the first place, any action on your part might harm future negotiations with your creditors.

The risks of credit card debt settlement

risks of credit card debt settlement

risks of credit card debt settlement

Debt settlement companies are able to settle one or more of your debts. At what cost though?

  1. You would probably be required to deposit money in your special saving account for up to two years before all your debt can be settled. That equals to 36 monthly payments. Many people find it impossible to keep up and as a result, drop out of the debt settlement program. Although that is a bad way out of the situation, it can be easily avoided through careful planning. When you have reviewed and planned your budget, you will be able to make the monthly payments. All you need to do is make sure you can keep up with the payments until the end of the debt settlement program. In any case, that sounds better than being chased by your creditors
  1. Although it is the established practice, some of your creditors may not agree to negotiate your debt. They are under no obligation to negotiate with your debt settlement company once they approach them to reach an agreement. So there is some chance your debt settlement company may not be able to settle some of your debt. However, that was never the deal. They have promised to settle your debt either partly or in whole.It is your responsibility who you start owing and how hard it is to deal with them later.
    In most cases, your debt settlement company would be useful to you because they work with creditors on a daily basis and have established relations with your creditors.They know what to expect and how to proceed so they will have a realistic idea what can be achieved. All you need to do is discuss your expectations with your debt settlement company and be clear of what they can offer. You need to be realistic too. In case you don’t have your debt settlement to settle your debt, you will have to deal with those hard nosed creditors on your own.
  1. Your debt settlement company may settle your smaller debts first. That means interest and fees on your bigger ones might go up in the meantime. The problem with being too much into debt is you often end up with many different debts owed to many different creditors. To be debt-free, you need a strategy. Reducing the amount of debt is one of them. Many creditors would be much more willing to negotiate with someone who has two creditors than with someone who has 50.
  1.  You might get calls from your creditors or debt collectors requesting you to pay again. Although those might be unpleasant, you should know they do not have the legal right to be paid twice for the same debt. If you want to stay out of trouble, do not do anything rash. It is probably best if you consult your lawyer. The important thing is not to let yourself become an easy victim. If they see they have a chance to deceive you, they will use it and might even sue you for not paying up. All you have to do is be prepared and know your rights.
  1.  Being part of a debt settlement program might have some negative effect on your credit report. That is because debt settlement programs often encourage you to stop sending payments directly to your creditors. However, it is an inevitable temporary situation that will change once you are out of debt. What can be better for your credit report than being debt free? Anyway, in most cases, you have a choice how to proceed so it is up to you.

How to avoid debt settlement scams?

How to avoid debt settlement scams?

How to avoid debt settlement scams?

Take your time when choosing the right credit card debt collecting company. There area  few ways in which they might try to deceive you and leave you with nothing of what they have promised. The most popular debt settlement scams are:

  1.  Some companies try to charge you fees before they have settled any of your debt. Although at some point that may sound reasonable as they are providing you a service, you should know that in this situation, you are paying for nothing because you have no actual guarantee that they will fulfill whatever promises they have given you.Another thing is that such a practice is forbidden by the Federal Trade Commission (FTC) in its Telemarketing Sales Rule (TSL) for companies engaged in telemarketing those services. However, you can be certain that you will find a debt settlement company which will not try to scam you. You just need to be careful with your selection.
  1. Some companies fail to explain the risks that come with their debt settlement programs. Many of the things you can expect though you can find in this article and some of them surely you can figure out on your own. Your debt settlement company is not obliged to simplify everything for you. Their job is to make your debt go away. Usually, they will fulfill their promises to you, regardless of whether they have told you everything or not.
  1. Some debt settlement companies claim that they can make your unsecured debt go away or that it can be paid for pennies on the dollar. Although, this is exactly how it works with a secured debt, it might go in a slightly different manner when it comes to an unsecured one. That involved a higher level of uncertainty and risks that unsecured debt has for the lender. An unsecured debt is simply said- a loan that is not backed up by any underlying assets. Your credit card debt falls under that category.
    The only reason someone would be willing to extend such a loan is because they expect a full repayment. That is why many unsecured creditors are not be willing to negotiate with your credit card debt settling company. They might even want to sue to get back what you owe them. That is very reasonable behavior and it should not surprise you. However, some debt settlement companies can actually help you resolve your unsecured debt. Follow your track record, talk with satisfied clients of your preferred debt settlement company and decide whether to believe their promises or not.
  1.  Some credit card debt settlement companies will request you to stop communicating with your creditor.That is because it is the standard practice. However, you may want to avoid a debt collecting company that takes that step without explaining to you what risks may come with it.Some of which may include you receiving unwanted debt collection calls, be requested to make repayments or even get sued which may affect your credit record sometimes. You want to be aware of the risks you are taking even when the debt collection company’s requests for you to stop communication with your creditors seem reasonable and necessary.
  1. Some credit card debt settlement companies may even try to promise you that they are making all debt collectors calls and managing lawsuits. Although it is possible that those companies have worked with your creditors in the past and have reached some kind of an agreement on debt settlement, it is usually a wise choice to avoid debt settlement companies that make such promises.
    For one thing, those promises are very hard to keep. They depend entirely on a third party’s behavior and a creditor may change their mind anytime before the debt is settled. Be smart and stay away from credit card debt settlement companies that try to sugarcoat the process for you. If you really want to stay out of trouble and out of debt, find a credit card debt settlement company which you can trust.

How to choose good credit card debt settlement company?

How to choose good credit card debt settlement company?

How to choose good credit card debt settlement company?

The most secure thing you can do is choose your credit card debt settlement company carefully. There are a few things you can consider:

Research
You do not want to go into business with a scamming company. You will spend a lot of your money in the processes of collecting the lump sum required by the program. Don’t just throw those away. You have two options- you can check the company with your state Attorney General or with your local consumer’s protection agency.

Preferably, do both. From the local consumer protection agency, you can learn if there are any  consumer complaint against the company you are thinking of working with. Moreover, your state Attorney General can provide you with another kind of useful information – whether the credit card debt settlement company you have chosen is required to be licensed in your state and if so, whether it is licensed.

Another thing we recommend you to do is to enter the name of your debt settlement company of your choice into search engines. There you can see what others have said about it. You can also find out if there are state or federal lawsuits against it for being part of scam schemes.

You can also request the company to introduce you to some of their previous clients or ask for such among your circle of acquaintances. However, bear in mind that the things you heard may not be true. It is the same with the opinions you find on the Internet. Most companies are aware their potential clients will do a background check on them. Therefore, they can purposefully add positive comments on their business through fake profiles. Be critical of the information you receive.

What are the fees involved when settling credit card debt?

  1. What are the fees involved?

    What are the fees involved?

       Bank account manager fee
    When you become part of credit card debt settlement program, you would be required to put money in a dedicated bank account. However, this account will be managed by an independent third party. You may expect to be charged for this service.

    You are still entitled to the interest from your money in the bank but that money would be used for payment to your creditors and for the fees you owe your debt settlement company. It is your account manager’s job to make repayments from your account. That is why you are paying him a fee for his service.

  1.    Credit card debt settlement company fee
    As mentioned above, you are not supposed to pay your debt settlement company in advance. You are only required to pay them after they have settled some of your debts. Even so, you are not supposed to pay them the full fee. They can only receive part of the fee for the amount of debt they have settled for you.

    How does that work? For example, you have ten creditors and your debt settlement company has reached a settlement with only four of them. Therefore, they can receive only a quarter of their full fee or 40%. That goes for each successful settlement they make. For example, they managed to negotiate two more of your debts, they are entitled to another 20% of their full fee.
    In some cases, the company’s fee is based on the amount you save through the settlement. Because they are negotiating for you to pay cents on each dollar you owe. In case you owe $10,000 and they manage to settle your debt for $8,000, you are saving $2,000. They sometimes would base their fee on this amount. This is known as “contingency” fee.

What information should your credit card debt settlement company provide you with?

 information before signing up for any debt settlement service

information before signing up for any debt settlement service

Important: You should receive the following information before signing up for any debt settlement service. It is important for you to have know in advance to be clear about what you are getting yourself into.

  1.    Price and terms
    The debt settlement company you have chosen must provide you with detailed information of their terms and conditions. That is what they will require from you once you become part of their debt settlement program. They should also explain how much they will charge you for each thing so you are clear about how much the full service will cost and decide whether you can afford it.
  1.    Results

    results

    results

    They should clarify what they can help you to achieve within a certain time frame.The debt settlement whole process could take approximately three to four months but it varies from case to case. It is your debt settlement company job to set a time frame. You don’t want to be left disappointed with unrealistic expectations.

  1.    Offers
    This means that before they reach a settlement with your creditors, you should reach a settlement with them. They must tell you how much money you should save before they go make an offer to your creditors. That amount is the sum you need to have in your special savings account as part of the debt settlement program.
  1.    Non payments
    The debt settlement company must inform you whether you are required to stop making repayments to your creditors and let you know how that can affect you.

Other information you should know:

–    Although they stay in a separate saving account, you still own that money and you are entitled to interest from the bank

–    Normally, you should be allowed to withdraw your money anytime without a penalty unless you have explicitly agreed to something else in your agreement with the debt settlement company. Otherwise, you would be a victim of theft and should seek legal protection. In any case, make sure you know what you are signing with the debt settlement company.

–    The account administrated should be a third independent party. He should not be affiliated with the debt relief company. Therefore, he is not entitled to refer fee. Make sure they are not charging you for such.

What are the tax consequences of being part of a debt settlement program?

 tax consequences

tax consequences

Although you are saving a lot of money by joining a debt settlement program, some of them may be considered income and taxable by the relevant authorities. This depends on your personal financial situation. What savings from the debt settlement program may be considered taxable?

In some cases, credit card companies may report your settled debt to the IRS. For taxing purposes, that would be considered income. There is one exception and that is the case of insolvency. If you are “insolvent”, it will not be considered as income. However, it is a complex issue and may be hard to determine.

It is recommended that you talk to a tax consultant to be sure you are classified under this exception. Insolvency occurs when your total debts are more than the fair market value of your total assets. A fair market value is an estimate market value that an average knowledgeable buyer would be willing to pay to an average knowledgeable seller on the market. This value should represent an accurate valuation or assessment of its worth.

What other debt relief options do you have?

  1.    Talk with your credit card company on your own
debt relief options

debt relief options

Depending on how good you are at negotiating, you may consider consulting your credit card company on your own. Remember, this can go wrong in many ways as there is no way for you to know how they may respond. The last thing you want is to get on the wrong foot with your creditors. Also, they may turn you down.

If you don’t pay your debt for 180 days, your creditor will write it off as a loss. After that, they may be unwilling to negotiate with you. That is because they are already at a loss and don’t have the interest to reduce your repayment. They might be better if they sue you for the full amount you owe them. On the other hand, a debt settlement company in most cases will be able to negotiate a better deal on your behalf.

  1.    Contact a credit counselor

Credit counseling organizations can advise you on how to manage your money if you believe advice would be enough to help you make your debt go away. Credit counselors will discuss your financial situation with you and come up with a plan. Although they work for non – profit organizations, it doesn’t mean their services are free. In many cases, their services will be neither affordable nor legitimate. Many credit counseling organizations charge high fees or encourage their customers to make “voluntary” contributions (that can lead you into more debt).

You should also check if the credit counseling organization is government-approved. The U.S. Trustee Program (part of the U.S. Department of Justice) has a list of all government-approved organizations.

  1.    File for bankruptcy
 File for bankruptcy

File for bankruptcy

Filing for bankruptcy has serious consequences. In fact, it can be one of the worst options. It will lower your credit score dramatically. Also, the filing process is hard and long. You are facing a repayment plan again – the only difference is that it should be approved by the court. It will also last longer from three to five years.
The only good thing is that after you have made all payments under the plan, your debts are discharged. Have in mind that you may not reach this point and find it very hard to make the required payments should you consider filing for bankruptcy.

There are also some specific requirements in the filing process. You must get credit counseling for six months before you can file for bankruptcy. It should also be done by a government- approved organization. There are many government fees you need to pay on top of varying attorney fees.

Filing for bankruptcy is the one thing you should try to avoid. Seek help from a professional credit card debt settling company instead.

Which option is best for you?

The financial situation for every individual is different. There are a couple of possible solutions for your current debt situation but you should bear in mind that everything comes with certain amount of risk and possible negative effects. Credit card debt settlement remains the easiest and fastest way to become debt-free by far.

Getting out of debt: pros and cons of debt settlement

If your debt has started to get overwhelming, you are bound to start looking for a way out. In fact, you have several options, from self-help to filing for bankruptcy. It depends on your personal financial situation as to which option suits you better. However, many people opt for  debt settlement.

Debt settlement is an option that helps you settle your debt for a lot less that what you actually owe. It may sound good but you should be aware of its pitfalls. In this article, you can find out the advantages and disadvantages of debt settlement to help you make an informed financial choice.

What is debt settlement?

What is debt settlement?

What is debt settlement?

Debt settlement is performed by a debt settlement company of your choice. Their main objective is to negotiate on your behalf with your creditors. A debt settlement company could manage to settle your debt for less than what you actually owe. You will literally be paying pennies on the dollar. It is no wonder why so many people go for debt settlement as that is perceived to be an established way to deal with debts.

What is a debt settlement attorney?

A debt settlement attorney basically does the same thing as a debt settlement company. The only difference is that he is a legal professional. For a debt settlement attorney, settling your debts is not his main work for him him unlike debt settlement companies whose main business is helping their clients settle debts. Another difference is  the fees. With debt settlement lawyers, you will probably be getting a contingency deal. That means that he will get paid depending on how much he saves for you. However, some attorneys may be specialized in bankruptcy and advice you to take that option. The choice is completely yours. You need to make sure you compare other options you are presented with. If you have your mind set on debt settlement, do not let yourself be bullied or persuaded into changing your opinion. It is important to know what is the best for yourself.

How do debt settlement companies work?

How do debt settlement companies work?

How do debt settlement companies work?

First, debt settlement companies will discuss with you what kind of debt settlement program you can take up. After that, the company and you will have to reach an agreement on how much you will pay them for their service. You will also have to agree on how much you will be paying for your debts and you will have to prepare that amount in the following months. For this purpose, the debt settlement company will require you to open a separate bank account operated by a third independent party and make a monthly deposit into it until you reach the agreed amount.

Once that is done, the debt settlement company will start contacting and negotiating with your creditors. They will reach a debt settlement agreement between themselves. That agreement states how much you will have to actually pay for what you owe. When your debt has been settled with a certain creditor, you do not owe them money anymore. You have to pay the debt settlement company for their services after they’ve helped you settle your debt.

What are the advantages of debt settlement?

Your debts get settled fast

Your debts get settled fast

There are many benefits of debt settlement. That is why many people decide to go with this option to help themselves get out of debt.

1.  You do not have to deal with everything on your own – In fact, very little is required of you. All you need to do is make your monthly payments. Compared to self-help, you have to organize everything on your own – from your budgeting, negotiations with your creditors or debt collectors. It might get really hard and overwhelming and there is no saying how self-help in negotiating with your creditors may end. The good thing about debt settlement is you can just relax and let debt settlement professionals do all the hard work for you.

2. You have a trustworthy partner on your side – Whenever you are confused about the debt settlement process or have questions on how to improve your financial situation, you have your debt settlement company to help you.

3. Your debts get settled fast – Although it is not a magic tool that will make all your debts disappear overnight, debt settlement is relatively fast. It only takes up to several months. Debt settlement is fast compared to other options which may take two or up to seven years. During your debt settlement period,all you need to do is make monthly payments.

4. Your debts are getting settled for less than what you actually owe – Many times, your debt will get settled for less than 50% of the original debt. That is a really great deal and will save you a lot of money, time.

5.  It is simple  – Debt settlement is simple to understand and in its proceeding. It is only three steps – find a debt settlement company, deposit the agreement amount of money in your special bank account, sit back and wait for the debt settlement company negotiate your debt with your creditors.

6. It is easy – You don’t really have to do much except deposit the agreed amount of money in the special account.

7.  It gets you great savings – your debt could get settled for less than 50% of the original amount

What are the disadvantages of debt settlement?

disadvantages

disadvantages

Debt settlement has few downfalls too.

1. You need to do careful research on your debt settlement company

Debt settlement might be your best option but there could be people out there who try to take advantage of your situation. There are scams and scam companies. Don’t trust the first debt settlement company that you see Unfortunately, there is not dependable listing of debt settlement companies which could make it difficult when choosing the company you want to work with.

However, there are a couple of steps you can take in order not to be deceived. First, enter the name of a company you think is good into a search engine and see what people say about it online. Second, check the company with your state Attorney General. Third, check the company status at the local consumer protection agency. They will let you know if there are complaints against that company. After these three simple steps, you are about done with your debt settlement company research. All it is left for you to do is contact them and see how they conduct themselves professionally.

2. You should be careful about the scam schemes out there

You can find a lot of information warning you about scam schemes. The most popular scam is related to the fees. Some companies would require their clients to pay them in advance. Under federal law, they are not allowed to ask for this. Company may only request for their fee after they have finished some kind of service for you or when they have settled some of your debts. Even then, they can only ask for the payment for the debt they have already dealt with. For example, if you have 5 creditors and they have negotiated a successful deal with two of them, they can only receive two-fifths of their fee or 40% of their fees.

3. Debt settlement might temporarily damage your credit report

Debt settlement might damage your credit report

Debt settlement might damage your credit report

In some cases, you might be required to stop all payments to all your creditors. That will lead to negative effects on your credit report but those are only temporary. The important thing is that at the end of debt settlement, you will be debt- free and there is nothing better for your credit report than that.

4. You may continue to get calls from your creditors

Even after your debt has been settled, some creditors may keep trying to contact you and ask for repayments. Although that might seem worrying or annoying, you can deal with it. The best thing to do is consult your lawyer to advise you on how to get rid of your creditors because in some cases, those creditors may even try to sue you. However, when your debt has been settled, they have no basis to ask you for more money. Do not let yourself be bullied or harassed.

5.  Some creditors may be unwilling to negotiate

Nevertheless, that is your debt settlement company problem. If they are not able to convince your creditor to settle or negotiate with them, they will not get their fee. So the debt settlement professionals are actually highly motivated to achieve the agreed goal. The problem is that creditors are under no obligation to enter any kind of negotiations. However, for many of them, it is the reasonable thing to do to get whatever money they can have than to chase after you forever. When you are too much into debt, they may be willing to settle for less.

6. You may have to pay some bank fees   

You reach an agreement with your debt settlement company and you have to open a special bank account and make a monthly deposit into it. They will be used for the repayment of your debts. The account should be operated by a third independent party and you will have to make some payment to maintain. In reality, the money you pay to maintain that special account is just a drop in the ocean compared to how much money you are saving through the debt settlement.

It is obvious that with debt settlement, you have almost nothing to lose and a lot to win. It is the best choice you can make to be debt-free and improve your financial situation. That will not only benefit you but your family as well. Struggling with an impossible amount of debt is of no good for anybody, not even for your creditors. They want to see your debts settled too and that is why they agree to let you pay less than what you actually owe.