Debt Settlement or Bankruptcy – Which Is Better?

An alternative to bankruptcy is a debt settlement program. With the economic crisis brewing all around us, who hasn’t considered bankruptcy. Before doing anything further, keep reading. Debt settlement is a valuable option for those who are in dire straits financially. You are not alone and this article will explain the way to become debt free.

The first thing you need to do is to get organized with all of your bills. For some people this is rather difficult, because of the fear of how bad off you are. If you haven’t paid any of your bills lately, whose knees wouldn’t shake? Go ahead collect all of your bills, and lay them out, including your monthly payments. This unopened pile is called your monthly expenses. Go ahead open them all. Make a list of the total balance on all of them and include the credit card interest rates, then total those numbers. This number is what you owe. Next write down your total monthly income. Don’t panic keep reading.

 

It is understandable that when living from paycheck to paycheck, that when something out of the ordinary goes wrong, like the cost of a new tire, or a medical emergency, puts you in a tail spin. Everyone has a story about the unexpected. So when reviewing your monthly expenses, compared to your income, are you paying out more than what is coming in? Read below, and ask yourself, and be honest, how have you been handling this crisis?

 

Have you made only the minimum payment on your credit cards each month Are you near the limit on your credit cards Have you applied for more credit cards in the past year Have you started charging small items or essentials like food and gasoline Have you recently paid a monthly bill using a credit card cash advance Are you late in paying some or all of your bills and if so how often does that happen You are not clear as to how much you owe your creditors Are you getting past due notices from your creditors and annoying phone calls from creditors How dependent are you on credit cards You don’t have a budget in place

Be honest, how many yes’s did you admit to? Well there is a solution and it’s called debt settlement. The question is are you in need for a debt settlement company? Or you can deal with this crisis on your own, and a lot of people do.

However, most people have needed help, or just didn’t want to deal with it, and for a percentage they allowed a debt settlement company to settle for them. Now if you do this yourself, it is going to take a lot of time and energy, but in the end you would have saved a lot of money. Before you consider this understand that your creditors will say and do almost anything to get you to pay them, pronto. So do your homework and know what you are getting into if you want to deal with the credit card companies. This means know the law concerning your rights, and what the creditors can do and can’t do to you, even if it’s illegal. Do your homework at debt forums were people are more than welcome to help you with this.

Is it better for you to go with a company- this is up to you. A debt settlement company will have you set up on a budget, to add funds to an account on your behalf, and let your money build while they do the negotiating for you. By letting the debt settlement company work with you, they will deal with the creditors, and you won’t have to. During this process, you still might receive calls from your creditors, and if this should happen just tell them that you are working with a debt settlement company now and give them the company number and hang up. Remember that the debt settlement company will work for you and get you the best settlement. They will help you to get your budget under control, and have you paid off sooner than any other method except for bankruptcy. The settlement company will work for you in getting you the best settlement possible. Your budget will fit your needs, and have you paid off quicker than any other method.

You might want to ask the debt settlement company can this affect your credit score. The answer is yes, but not forever. No matter which of the debt solutionprograms you choose, your credit rating will suffer. But if you have answered yes to the questions above, then your credit rating has already been hurt. When you first sign up with the debt settlement company your score will go down until some of the debts are negotiated and paid off. When your are finished with the debt settlement company, and your debts have been paid in full, your score will go back up and you will be back on your way towards getting your credit rating back to normal. By staying on course, your credit rating will go up again within a year, whereas if you had filed for bankruptcy, your credit score will take as long as ten years to recover.

Debt Settlement: Your Bankruptcy Alternative?

There are several different paths you can travel to achieve effective credit card debt reduction and pursue living a debt free life. The method which will be covered here is called debt settlement, and there are numerous debt settlement services to choose from if you determine this is the “debt recovery path” you are going to take. Credit card debt settlement is a credit card debt reduction solution where a negotiation is done with each individual creditor so that a lesser amount is paid, but considered a payment in full on the total outstanding debt. This debt settlement method is oftentimes called credit card debt negotiation or credit card settlement.

To assess if debt settlement is a credit card debt reduction method may be right for you, it is important to first to know the path you are on right now. Begin by asking yourself some very important questions, and be brutally honest with yourself! Have your bills gone to collection agencies? If your accounts have not been turned over to collection agencies, how many months past due are you? Have you started using “balance transfers” as a way of moving your unsecured debt from one creditor to another? Has the concept of filing bankruptcy been in the back of your mind? Are you barely able to pay your minimum payments? Or have you been able to avoid most of these situations, but are afraid you won’t be able to do so for much longer? Are you under constant financial pressure from your credit card debt problems?

Most people would rather pay considerably less money than they owe, right? Not so fast, creditors will only agree to this type of debt settlement program with people who appear to be on the verge of filing bankruptcy but prefer a bankruptcy alternative. The reason a creditor will agree to allow you to pay thousands less than you owe, is because once you are involved in a bankruptcy you will no longer be obligated to pay them a single cent. They prefer to get “something” rather than “nothing”. Obviously creditors will take what they can get while they can get it. However, do know that you are not required to file bankruptcy to be considered for a debt settlement offer from an unsecured creditor. All you need is a reputable and experienced debt settlement service that is both effective and diligent about convincing your creditors to take reduced offers on your credit card debt. Debt settlement services will have those “bankruptcy alternative” discussions directly with your contracted creditors. They will make your creditors aware that you prefer to avoid bankruptcy but have little disposable cash flow to work with, both now and in the foreseeable long term future.

Your creditors may consider you a prime candidate for credit card debt settlement if they review your credit payment history and find that you have frequently been late on your monthly payments, failed to make your payments for several months at a time, or even have unsecured accounts already turned over to various collection agencies. Remember that unsecured creditors do not hold assets that could cover your credit card debt balances like a home or a vehicle. If this is your situation you should contact a debt settlement service with experienced negotiators that will work on your behalf to help reduce your credit card debt through debt negotiation. You will find that debt settlement programs are designed around your current financial dilemma, and attempt to give you significant relief in the monthly commitment required for your credit card debts. Debt settlement programs typically take 2-3 years to complete. You will find that debt settlement services offer a complimentary consultation. This consultation process is used to assess your financial situation and provide you with a workable credit card debt reduction plan that may become your bankruptcy alternative!

Avoid Bankruptcy with Credit Card Debt Settlement

Debt settlement is just one of numerous ways to climb out of debt. Debt consolidation and credit counseling are both preferable to debt settlement, but debt settlement may help you avoid bankruptcy or foreclosure if your situation is very serious.

Unfortunately, sometimes it’s not possible to repay your debts in full. If you’ve suffered an extended job loss, an expensive medical emergency or illness, or a death in the family, you may not be able to recover from the debt created by the situation. Rather than file for bankruptcy, which will ruin your credit for 7 to 10 years, you could try debt settlement first.

How Debt Settlement Works

You have the option of settling your debt yourself, but you’re more likely to be successful if you hire a professional debt settlement service to handle your paperwork and negotiations. A debt settlement company will review your debts and determine which are most likely to be settled. Credit card debt settlement is the most common form. Medical debts are often negotiable. Student loans are not negotiable and mortgages are almost never negotiable.

When you apply for debt settlement, the service will review your accounts and then contact your creditors to negotiate a settlement. Settlements are typically for 30-50% of the balance, but can be as high as 75-80%. In rare cases, your settlement can be as low as 20%. A reputable debt settlement service won’t guarantee a specific rate and won’t offer “credit repair” services in addition to the settlement.

The settlement process can take anywhere from a few months to a few years, depending on the level of your debt. Some services ask you to make debt payments to their escrow service or ask you to set aside the money yourself. Some services require lump sums to pay off negotiated debts while others let you pay over time.

Credit Card Debt Settlement and Your Credit Rating

Debt settlement will affect your credit rating. Your creditors will report your accounts as “account settled” or “account settled for less than the full balance.” Although these statements aren’t positive, they’re better than a bankruptcy or multiple current delinquencies. If you’re considering credit card debt settlement, it’s likely that you’re already behind on payments, facing collection, or considering bankruptcy, so debt settlement may actually help you start to restore your credit.

Like debt management plans, debt settlement can also help you learn to change your spending habits and approach to credit card debt. Most settlement services require that you stop using credit cards or taking out loans while you’re in the program. Once you learn to stop relying on credit, you’ll be less likely to fall into debt again.

The Downsides of Debt Settlement

In addition to the ding on your credit rating, debt settlement has another negative side effect: higher taxes. The IRS requires that all settlements over $600 be reported as income, which means you could be taxed on the amount of the debt you didn’t pay. When combined with settlement fees, you may find that the settlement won’t save you much money over paying the debt in full.

You should also know that creditors are not required to settle your debts. You may have to pay some or all of your debts in full if the settlement service isn’t able to negotiate with your creditors. Creditors will generally make their decision based on your income, payment history, financial situation, and the number and amount of the debts being settled. They’re unlikely to negotiate a greatly reduced settlement if  you’re able to pay most of your other debts or own a home with equity. They’re more likely to negotiate if you’re in collection, about to file for bankruptcy, or have several debts in delinquency because they’d rather receive something than face debt cancellation in bankruptcy court.

Credit card debt settlement should be reserved for dire situations. If you’re on the verge of bankruptcy, then debt settlement is appropriate for you. If you have the means to repay your debts, seek debt consolidation or credit counseling instead.

For more articles on Credit Card Debt Settlement, visit: http://www.bills.com/credit-card-debt-settlement/

Can you eliminate credit card debt by declaring bankruptcy?

Can an individual eliminate credit card debt by declaring bankruptcy? I didn’t think you could wipe it out, just get the bill collectors off your back. But, someone told me that it depends on which chapter of bankruptcy you use. The right one WILL eliminate credit card debt. I know someone who has $80,000 in credit card debt and they are trying to do that to get rid of that debt! Is it really possible? Are there any restrictions in doing this. Can you ever get a credit card again if you do it?
If you file bankruptcy to eliminate all debt, do you have to give up ALL of your possessions? Will you have anything left?
This is for a friend of mine (really). They don’t own a home. They have 2 cars and some furniture and A 401k plan. Between the two of them they make about $40,000 a year. I don’t see how debt consolidation will help them How could they EVER pay off $80,000!?! They had a house but they used up all the equity in it over the years and sold it recently and broke even on the deal, ending up with NOTHING! What a mess! I just didn’t think they could wipe out their credit card debt! And, it really isn’t fair to the rest of us that pay our bills!

What are the effects of credit card debt?

Im doing a report on Credit Card Debt and there isnt much about the direct effects of being in credit card debt.

I know bankruptcy is an effect but what else can happen?

Bankruptcy or choosing to default on credit card debt. What are the ramifications of each?

I have A LOT of credit card debt from opening a business and having to sell it in one year because of family responsibilities. Saw a bankruptcy attorney, but the options don’t seem to work for me as there’s no way I could ever pay off these debts.
I know it’s very immoral, but what will actually happen if I just stop paying on them? I know I’ll be inendated with phone calls and lose my good credit standing, but can they attach my bank account or any other asset?

Can you include credit card debt in a bankruptcy?

I have a friend in FL that is filing bankruptcy. I thought they passes a law a few years ago that stated you could not include credit card debt in bk. Is that true? They are telling me that you can include credit card debt.

How should I handle my credit card debt since I am foreclosing on my house?

I am going to let my house in California foreclose. I have about $28,000.00 in credit card debt. Should I file for bankruptcy? Should I just not pay my credit cards? Or should I continue to pay my credit cards? Is there a certain dollar amount of income you are allowed to make to be able to file for bankruptcy?

Top Ten Ways to Find Yourself in Bankruptcy – Debt Consolidation Help

10. Not having a plan in case of emergency
A lot of people cut their budgets very close.  If you have you money portioned out precisely for your regular expenditures and you haven’t left anything in the budget for emergencies, how will you pay for repairs if your car breaks down?  If your house suddenly needs repair?  If you have emergency medical bills not covered by your insurance?  It is important to make sure you have a plan to cover emergency spending.  If that means cutting things out of your regular budget that may not really be necessary, make sure you do that.

9.  Spending money on luxury items you don’t need
This one should be obvious, but a lot of us violate this simple rule anyway.  When you see a new car, an article of brand-name clothing or piece of electronics equipment, ask yourself a couple of questions.  1) Is there money in my budget for this? And 2) Do I really need this?  If it’s an impulse buy, odds are first answer is no.  The second answer is probably no in any event.  Think about whether you’d rather have the item or financial stability.  

8.  Buying extravagant gifts for friends and family
This is basically the same as the previous item on this list.  The difference is that some people have a problem not with buying things for themselves, but with buying things for others.  Selflessness is commendable, but it doesn’t have to be as expensive as you might be making it.  It’s not going to do your friends and family any good for you to go bankrupt buying them extravagant birthday presents.

7.  Letting small expenditures add up
If your money is disappearing every month and you can’t figure out where it’s going, odds are you’re not keeping track of minor expenditures.  Say you take a trip to the grocery store to pick up a gallon of milk for three dollars.  While you’re there you pick up some ice cream, maybe a twelve pack of soda.  You spend three dollars on candy for the kids in the checkout line.  Swing through a drive-through on the way home to get some food.  Why not get the large for only a few cents more?   Each of these items individually may not be very significant, but by the time you get home, you may have spent $30-$40 during you trip out for some milk.  If these sound like the kind of expenditures you might make without keeping track, that’s probably where your money is going.

6.  Not saving money
If despite your best efforts you find yourself owing more money than you expected, it can be a huge relief to realize you have some money saved up that can help gt you out of trouble.  Try putting a percentage of every paycheck into a savings account you never touch.  If something you didn’t expect rears up and you have to pay a lot of money, you may find that you can take care of it without declaring bankruptcy.

5.  Not keeping track of your funds
How much money do you currently have in your checking account?  How about your savings?  What have you put on your credit card in the past week?  If you don’t know the answer to all three of these questions, you’re probably going to wind up overspending.

4. Putting too much on your credit card
Credit card debt is a serious problem in this country.  One main reason is that people treat them as free money without really planning how they will pay off the money they put on them.  Another is that people don’t think about the interest rate they will have to pay on purchases on their credit card.  If you are making a purchase on credit that you could pay in cash, it may be better to use cash than to risk interest rates running away from you.

3. Letting late fees build up
Almost everyone is late with a bill from time to time.  What can really kill you is being late with your bills so often that late fees and surcharges start to build up.  Before long, the late fees you pay every month may be as large as any of your other bills.

2.  Ignoring bills
This should be obvious, but some people simply don’t take action.  If you don’t pay your creditors, they are within their rights to take collection action against you.  Most of them, however are willing to be lenient if you will simply talk to them.  A lot of companies will allow you extensions if you need them as long as you talk to them in time.  Give it a try.

1.  Spending more than you earn
Everything else on this list is derived from this one simple rule:  Know how much you make, and spend less than that.  It’s sounds simple, but it can fell complicated.  Once you start keeping track of you earnings and expenses, however, you’ll probably be surprised at how easy it becomes.

Debt Settlement / Debt Consolidation Help / Debt Settlement Services

How to Get Free From Debt Without the Shackles of Bankruptcy

If you’re like most American’s you are doing your best to avoid new debt and pay down old debt.  However, some people are being crushed by intense credit card debt, medical bills and other forms of unsecured debt.  Many individuals are considering bankruptcy, but they don’t understand the real impact bankruptcy can have on their lives and their livelihood. 

One option many people haven’t even considered is debt settlement.  Banks are starving for cash, as demonstrated by the Federal government’s stress test which has ordered banks to stockpile billions of dollars in their own accounts.  Debt settlement works with lenders and banks to settle your debt for less than you owe.  This means that instead of paying minimum balances for years at a time, trying to pay off $20,000 credit card debt with $50 a month, you can negotiate with your lender.
With a proper debt settlement company, you can reduce your unsecured debt by 40-60%, have your late fees waived, settle all your credit card debt for less than you owe, put an end to collection phone calls, protect yourself from legal action, avoid bankruptcy and become debt free.

Most Americans can only dream of becoming debt free, but with a highly skilled debt settlement company, being debt free becomes a reality.  Debt settlement offers you key benefits:

Avoiding Bankruptcy – With a qualified debt settlement company, you can reduce your debt burden and pay off your bills, opening up more money every month.  You can negotiate with creditors or collection agencies and settle your debts for as much as you can afford to pay.  Doing this will avoid Chapter 7 and 11 bankruptcy, and keep your credit standing intact in the long term.

Avoid Unfair Collection Practices – You can avoid unfair collection practices, as well as harassing phone calls, by debt collectors if you negotiate a settlement.  No more fearing the telephone, no more avoiding blocked calls and less tress.

Eliminate Late Fees – One of the ways credit card companies drive up your debt is by charging late fees.  A debt settlement ends the late fees so you can pay off your credit card debt.

Avoid Lawsuits and Legal Action – Unsecured debt may lead to lawsuits by your lenders and by banks.  Debt settlement avoids any legal troubles and keeps your record clean.

Debt settlement companies offer a settlement program, working with you to discover exactly what plan works for you.  After your total credit card debt, or other form of unsecured debt, a debt settlement company will attempt to negotiate with your lender drive down the cost.  You may be able to pay a lump sum, or create monthly payments.  If you don’t have any money saved up, a qualified debt settlement company will collect your money for you and create an account that will go towards paying off your debt.
Lenders and banks need cash so badly right now, that some settlement amounts come to less than half of what the person owes. That means a $10,000 debt might be settled for $5,000!

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