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Is Debt Negotiation For You?

daka — Fri, 11 Dec 2009 03:59:54 +0000

Debt negotiation is a relatively new form of debt relief that is gaining popularity for its results in reducing credit card and consumer debt and because the process can also help homeowners avoid foreclosure by making home loan modifications more likely to be approved. There are two schools of thought on the subject; one that focuses on broken settlements, credit scores and direct negotiations while the other centers on the short and long term benefits of the practice. First, the arguments against debt negotiations:* Broken settlements ? A settlement can be broken by either the party executing the negotiation or the customer. True, there have been instances were companies didn’t follow through on their promises to see the negotiation from beginning to end. The percentage of customers involved in those situations has been small and could have been prevented with some due diligence. Many companies have been drawn into the debt relief industry by the sheer numbers of borrowers and their escalating debt starting in the late 90’s. What had started as debt counseling run by a few non-profits mushroomed into an industry populated with thousands of new and inexperienced companies offering services far beyond the scope of the original mandate of assisting indebted customers with their debts Within those thousands of companies were those that didn’t deliver on debt negotiations, counseling, or consolidation. Customers can also break a settlement by not making enough payments to settle the negotiation. Whether by circumstance or intention, some will stop making payments during the 18 to 48 months of the settlement process. * Credit scores ? A debt negotiation will likely decrease the credit score of a borrower that enters a debt negotiation, but it depends on what that score is at the time the process starts. A vast majority of borrowers that start a debt negotiation are already behind on payments and are consequently taking hits on credit scores so the negotiation won’t have as much of an effect. The second issue on credit scores is that the negotiation stays on the report for up to seven years. While that can be true, doing nothing will leave charge-offs and open balances on the report indefinitely. Finalized, settled, and closed accounts are ultimately a much better reflection on a credit report than accounts that appear intended and/or neglected.* Direct negotiation ? Borrowers can initiate direct negotiations and, in fact, may be contacted by their lenders to do so. One problem with going direct is that there are normally several accounts to be negotiated, all of which will need to be done independently. A second issue is that the offers in direct negotiations are usually for lump sums or for payoffs within a few months of agreement. Those types of payments are often unworkable for the borrower, especially if there is more than one lump sum agreement at a time. The benefits of debt negotiations are as follows:* Immediate relief ? Upon initiation of the debt negotiation, the borrower will immediately experience an approximate reduction of 50% on payment obligations for all accounts involved in the negotiation. Reductions can vary, depending on the borrower’s ability to pay. By making payments in excess of the 50% reduction the borrower may be able to pay off the negotiated balances faster.* Debt balances cut by 40 to 60% – Depending on the creditor, balances can be negotiated down by 60% or more. For a negotiation covering multiple accounts the average reduction for the total is 50%. Once the negotiated balances have been settled the accounts are considered to be paid in full with no further obligation by the borrower to the lender.* A wide spectrum of accounts which can be negotiated ? A debt negotiation can include credit cards, signature loans, department store debt, unpaid medical bills, unpaid utility bills, and more. This effectively gives the borrower a chance to wipe the slate clean without the disadvantages of filing bankruptcy.* Paying off all debts within four years ? As credit card balances have accumulated for consumers over time, making payments that materially reduce the principle balance has become difficult, if not impossible. For those that can only afford to make minimum payments, a full payoff could take twenty five years or more. Calculated out over that time a borrower would pay many times the actual balance in interest alone. Contrast that scenario with a full payoff of debts over four years or less at approximately half the balance amount and the merits of debt negotiation become very apparent.* Increased odds of approval for home loan modifications ? A debt settlement can enhance an application for a home loan modification by showing a reduction of consumer debt payments which allows for a greater availability of a homeowner’s income toward mortgage payments. In fact, a debt negotiation could be the difference between a successful loan modification and foreclosure.You will continue to hear pro and con arguments regarding debt negotiations. One thing to keep in mind is that credit counselors have been and still are backed by credit card issuers. When listening or hearing about debt negotiations, always consider the source. If you are contemplating a debt negotiation, be sure to conduct some due diligence before selecting a firm to act on your behalf. Visit the firm and ask enough questions to get comfortable with the partnership. Insist on a law firm experienced in debt negotiations and, if applicable, home loan modifications. Getting back on your feet will take partnering with the right firm and a commitment to seeing the process through to its completion. Take care of those issues, and you’re on your way to financial freedom.

Debt Negotiation Settlement is an Important Tool of Negotiating Debt

daka — Sun, 06 Dec 2009 23:58:50 +0000

To achieve some degree of control on your debt you must look at either one time settlement or relaxed payment terms. Remember, lot of homework is done before the actual negotiations. The truth is that the situation has to be created for effective debt negotiation settlement. The process of debt negotiation settlement starts with the debtor sitting down with a negotiator and making a list of outstanding loans on each financial instrument through which he has borrowed. Let us be reminded that only unsecured loans in the form of credit card loans, utility bills, medical bills etc are fit for negotiating debt. Secured loans like mortgage and car loan do not come under the umbrella for debt negotiation settlement. The debt negotiator will call upon all relevant documents that will throw light on the spending habits, essential expenses and loan amounts. Once the spending and saving pattern is clear, then its time to carve out how much the debtor will be able to spare, through the monthly incomes. In case the person negotiating debt has a savings, it can be helpful in debt negotiation settlement. The financial advice given for negotiating debt is not limited to rounding off the current debt situation, but companies negotiating debt also educate the client on budgeting, financial planning, and control, and also impress upon them the concept of timely payment of bills in order to ensure healthy financial habits. The different options that would be on offer are consolidation, prolonging the payment term, outright lump sum debt settlement. There are some options available, where one can take a breather to reorganize the existing finances in such a manner, that you start repayment again at a better rate without any defaults. Well essentially, it is upon the negotiating company’s skill and knowledge of the market that will enable them in presenting the best option of negotiating debt. debt negotiation settlement is gaining momentum in resolving bad debt condition, with the national debt going past the two trillion dollar mark.negotiating debt can be a game of patience as well. If you show as a debtor anxiousness to settle or negotiate the debt then you may not be able to get the best option that might be available. Hence, it will be more prudent to allow the negotiator to take over the debt negotiation settlement. This will ensure that you are not hassled in managing all the forms. The negotiating company will have that already done it for you. What the company negotiating debt will tell you to do is either pool in all repayments on one card or focus on one card at a time. The first process is known as consolidation where in you move all loans of different smaller accounts with different companies to one account of one company. Thus, some of the creditors will have got their money back, and one can focus on one creditor, which should make the job easier. The second process looks at paying the minimum due on all credit channels albeit one. This card will be the focus for quick settlement by paying up as much as possible in the shortest period. However, the second option is best suited for a situation when the person is in a position to pay back small amounts. In case you are too burdened and have defaulted repeatedly due to dwindling reserves. The first option of collating all repayments to one card may help. Once the entire loan amount is on one card, the debt negotiating company will look to drive a hard bargain with the credit company. The debt negotiation settlement should work to your advantage in this situation, since the creditor will now have a big amount of money to look at with respect to the previous balance. Hence, negotiating debt in such a situation becomes easier, and the creditor might agree upon a reduced amount paid in full.

Bad Credit Debt Consolidation Loans: Repay Multiple Debts With Ease

daka — Sun, 29 Nov 2009 11:59:32 +0000

If you are burdened with multiple debts and finding it difficult to pay the high interest rates for all your debts don’t worry! As you are not the only one in this position. Debt consolidation loan is the answer; this is the easiest way out for you.Types of Debt Consolidation: There are two types of debt consolidation Secured and Unsecured.Secured type: Here you have to have to pledge collateral in the form of property or any other asset and it is against this that you are given a debt consolidation loan. Here the rate will be less as the risk is on the borrower’s side. The borrower is liable to lose his asset if he defaults. Hence one must be careful in this type of agreement.Unsecured Type: In this kind of loan you need not give any collateral. This makes it safe for the borrower but here the rate of interest will also increase as the risk will be on the lenders side. These loans are sanctioned comparatively fast as no time is wasted in calculating the value of the collateral. But here your credit rating will influence the rate of interest that you are charged. The better your records the lower will be your interest rates. The borrower who cannot afford to place any security or do not want to place any collateral can opt for the unsecured option. Unsecured loans can go up to

Secured Debt vs. Unsecured Debt

daka — Sat, 28 Nov 2009 06:00:10 +0000

Many Americans don’t understand the difference between secured and unsecured debt. In fact, few Americans even know either secured or unsecured debt exists. Secured debt – Debt backed or secured by collateral to reduce the risk associated with lending. An example would be a mortgage, your house is considered collateral towards the debt. If you default on repayment, the bank seizes your house, sells it and uses the proceeds to pay back the debt.Unsecured debt – A debt that is not tied to any item of property. A creditor doesn’t have the right to grab property to satisfy the debt if you default. The creditor’s only remedy is to sue you and get a judgment. Credit card debt falls into this category.DifferenceThe most straightforward way to understand the difference between unsecured and secured debt to is to work out if your creditor can take away any item or property in the case that you are not able to repay the overdue amount in time. Common examples of unsecured debt, other than credit cards, are medical bills and store cards where you aren’t putting up any materials as security for the debt. Car payments and home loans however do have physical items attached.BankruptcySecured and unsecured debt also make a difference when it comes to bankruptcy. In Chapter 7 bankruptcy, you can make the choice of either keeping the product or property and pay off your debt in some other way. When a debt is secured, the creditor has rights in the security (or collateral) in addition to the rights against the debtor. The debtor’s personal liability may be discharged in Chapter 7 while lien rights in the collateral pass through bankruptcy unaffected unless they are avoided or stripped down. In Chapter 13 bankruptcy, you are allowed to keep the merchandise or property, but you will be allowed to pay off your debt according to the Chapter 13 plan.Danger of BothDebt Settlement agencies will tell you that both secured and unsecured debt are dangerous. With secured debt, you could lose your home, your car or other possessions. With Unsecured debt, your credit score could take a major beating, any future loans could have seriously high interest rates and more.Unsecured DebtMany households across the United States have over $25,000 in unsecured debt. In fact, the average American carries over $9,000 in credit card debt alone. This raises stress levels, causes sleep disorders and sometimes even depression. Hiring a qualified debt consolidation or debt settlement company can help you clear your debt quicker, pay off your loans for less than you owe and move you towards financial freedom.Unsecured debt includes:Credit Card DebtMedical/Hospital BillsDepartment Store Charge CardsOil/Gas Credit CardsPersonal Loans (unsecured)

Commercial Real Estate Debt Won’t be the Next Shoe to Drop

daka — Tue, 24 Nov 2009 22:11:22 +0000

Recent CRE Headlines ? Which Ones Should We Believe?FDIC Frets Over CRE Loan Losses3 Signs of the Next Real Estate CollapseIs a Market Bottom Imminent?Plan Coming on Commercial LoansCommercial Real Estate Debt Won’t be the Next Shoe to Drop

So the commercial real estate market will be the next economic catastrophe but the market bottom is near, investors have amassed substantial acquisition capital, and the FDIC is getting ready with a plan. Will CRE be the next shoe to drop? No one is certain how this will play out and varying sources have varying opinions, but something must budge when $1.4 trillion of commercial real estate debt matures over the next three years.

As reported, those likely to budge will be community banks, many of which hold portfolios containing a large percentage of commercial real estate and construction loans. NREI reports that nation-wide, community banks hold roughly 11% of total CRE industry assets. To this point, FDIC Chairman Shelia Bair is encouraging these banks to restructure existing and maturing loans in hopes of avoiding or minimizing larger losses. Unless value returns quickly, community banks might be the next shoe to drop. That will sting, but does it mean that the commercial real estate market is collapsing, and what will the overall impact be on Main Street and the financial system.

Fear and history has everyone thinking about the residential mortgage meltdown and the widespread financial impact, but commercial real estate is a different beast. First, the majority of loans causing concern are construction and development loans, not existing buildings. Secondly, even though CRE property values are down, the underlying assets are/or have potential to be income producing properties, which can be value-add opportunities to capable investors. Lastly, there is a market for distressed commercial real estate (as opposed to second homes). Investors have been amassing cash and REITs have been raising capital to acquire many of these troubled CRE assets. According to a NREI survey, 70% of investors are preparing capital to acquire real estate assets indicating that some investors see great opportunity in commercial real estate despite the doom and gloom reports. Who are you going to believe and what’s your appetite for risk?

Commercial Real Estate Debt Won’t be the Next Shoe to Drop

daka — Tue, 24 Nov 2009 17:01:52 +0000

Too Much Debt

daka — Sun, 22 Nov 2009 15:12:45 +0000

Do you know why debt is a bad thing? Every American has some debt, and even Donald Trump has declared bankruptcy before, but seeing debt for what it truly is can be your first step towards financial freedom. If you make $60,000 a year and you have $10,000 in debt, that’s probably a manageable amount. However, if you’re making $25,000 a year and you have $10,000 in debt, that’s a problem.Debt CalculatorThe Federal government considers a debt burden of more than 40% of your gross income an indicator of financial distress. Think about it this way: if taxes are eating up 25% of your salary, you’re saving at a healthy 15% clip, and your loan payments hit 40%, you’re left with just 20% for everything else. To figure out your debt situation, here are some steps:

TOTAL MONTHLY DEBT PAYMENTS? Monthly net (take-home) pay +? Annual bonuses and overtime, divided by 12 +? Other annual income, divided by 12 =TOTAL MONTHLY INCOMESources of Debt ProblemsThere are all kinds of ways to rack up debt:

Debt Settlement ProfessionalsIn getting over the debts you owe, you may need a debt settlement professional to help you address your debt problems, pay down the money you owe and create a plan that will lead to financial independence. Living paycheck to paycheck is no way to live, and yet so many Americans do live that way. Losing sleep at night, heart disease, high blood pressure and more are all caused by the kinds of stress that come from having too much debt. Talking to someone who has counseled others, who has created successful plans for other people and who has seen large debts and small debts is very important.

Truths and Falsehoods on Credit Scores – Debt Settlement Help

daka — Fri, 13 Nov 2009 06:00:49 +0000

As the economy continues its rough ride, the fallout from mortgage and credit card late payments and delinquencies has dropped the credit scores of consumers across the country. As credit scores take a higher profile from news reports to conversation at cocktail parties, more consumers are taking interest in their credit reports. The problem with all the information and chatter is that much of it doesn’t accurately reflect what is important regarding credit scores and what is not.

Take this true/false test to see where you stand:1) You should check your report on occasion whether your are applying for a loan or not2) Checking your own report can hurt your score3) Closing a credit card account you are not using can hurt your credit score4) All credit scores are not the same5) Paying off outstanding balances is a great way to boost your score immediately6) A credit score is the same as a credit report7) Comparing loans can hurt a credit score8) Debt relief options hurt more than they help…and the answers are:1) True ? Reporting errors don’t happen every day but they do happen. Checking your report can save you from being surprised when you apply for a loan or a credit card. You can visit http://www.annualcreditreport.com/ for a free, no-obligation copy of your report.2) False ? Checking your own reports does not damage your score. Employer and landlord checks will not damage a score either.3) True ? One of the factors in calculating a credit score is the amount of unused but available credit, specifically on credit lines and credit cards. Closing these unused accounts can actually lower your credit by removing available credit from the report.4) True ? Between the three reporting agencies (Equifax, Experian and TransUnion) the scores will most likely be similar but not identical as each agency receives and compiles data in different ways.5) False ? Credit scores reflect an extended time frame so the sudden paying off of manageable balances won’t add much immediately. In fact, depleting cash balances to these pay off might hurt the overall review of you as a borrower.6) False ? A credit report is a history of your debts, payments, available balances, and open/closed accounts. The credit score is based on a formula that takes all that information and calculates a number between 300 and 850.7) False (and true) ? Hard loan inquiries for mortgages that come in over a span of about two weeks will not hurt a credit as agencies accept that loans might shopped generating multiple inquiries. Multiple credit card inquiries can hurt a score. False ? For consumers in trouble debt relief options can provide viable solutions to insurmountable debt. While these options will temporarily decrease credit scores, credit counseling, debt settlement and bankruptcy each have long term advantages for getting out of debt. Debt settlement is rapidly increasing in popularity due to the immediate reduction, usually around 50%, of monthly principle payments and the reduction in principle owed by 40 to 60%. Additionally, the timeline for getting out of debt is shorter than credit counseling and filing bankruptcy. Credit counseling can help to manage bills, and lower interest rates and monthly payments to creditors when debt issues are still manageable. Bankruptcy, an even more serious alternative, should be considered a last resort and discussed with a bankruptcy attorney.Credit scores are more important ever. Knowing what affects them and what doesn’t could make a huge difference in whether you get the loan you want or get it at all. Prior to doing anything that might hurt or help your score, be certain that your actions will help your financial picture.

Five Questions to See if Debt Settlement Right For You

daka — Tue, 10 Nov 2009 18:06:59 +0000

Struggling consumers have more choices today than ever when it comes to debt relief options. These choices include credit counseling, debt consolidation, debt settlement, and bankruptcy. Opinions vary widely on each option but making the right decision is a matter of assessing a borrower’s specific circumstances in relation to how each method works and what the ultimate result of each would be. The following are five questions to help get the decision making process started:1) What types of unsecured debt are you struggling with? Consumers are struggling with all kinds of debt including credit cards, medical payments, department store, and revolving debt. If the answer includes more than just credit cards, consolidation, settlement, or bankruptcy could be viable options.2) How many accounts are you struggling with? If you are struggling with payments on one or two accounts, especially if the balances are small, you might try seeing what those creditors might be willing to do for you directly. If your balances are larger (totaling over $10,000) you’ll want professional representation to guide you through the options for debt relief and the execution of the proper strategy. 3) Will you be able to pay off all your debts within five years? If the answer to this question is yes, then counseling or consolidation will be the right direction as both typically can reduced the overall interest rate on the debt but don’t reduce the outstanding balance. If the answer is no, debt settlement or bankruptcy will be the best choices.4) How much can you afford to pay each month relative to your current obligations? If you are in a situation where you just need a small reduction in your payments, counseling or consolidation with incremental decreases in overall interest rates on the accounts could suffice. If you’re in a position where you could consistently make payments if they were cut by about 50%, then debt settlement will be the right the right choice. Being in a position where you can’t put at least $100 toward you’re debt each month could qualify you for a chapter 7 filing.5) Are you struggling with your mortgage? Many borrowers that are struggling with credit cards and other unsecured debt are also struggling with making their mortgage payments. A new strategy being employed by firms with experience in multiple venues is to combine debt settlement with a home loan modification to reduce both payments and fortify the homeowner’s finances to the point that both payments will be sustainable for the long term. When considering debt relief options, borrowers need to look at the plusses and minuses and make a full assessment of each to determine which one will provide the best outcome for both the short and long term. A full analysis is critical due to the fact that switching strategies can be costly and waste valuable time. For many, taking counsel from an experienced professional will be the best way to define the best path and the ultimate outcome. In a situation where getting it right the first time through is a necessity, getting the right advice up front can prevent mistakes, speed the process, and put you on the path to financial recovery.

Does the Government Advocate Debt Settlement?

daka — Mon, 02 Nov 2009 15:00:15 +0000

Some people wonder whether debt settlement is a safe or wise course of action. For those who look to the government provide advice on how to get back on their feet, the question is simple: does the government advocate debt settlement. The answer is equally simple: a resounding yes. Since the worldwide economic crisis has been increasing in severity, the government has created programs to help people get fair and helpful debt settlements. In fact, the FDIC regulates bank debt settlement to prevent unfair and deceptive practices from harming consumers who need to get out of debt.The Economic Crisis Necessitates Debt SettlementThe fact is people are having a harder and harder time making ends meet these days. Many people are finding it necessary to seek outside help in dealing with crushing debt problems. Wages are going down, layoffs are becoming more common, and it seems that everything is becoming more expensive. Sometimes there’s no way out of the situation other than bankruptcy or debt settlement. While the law does allow you to file bankruptcy, the government does not advocate it because it damages the economy by forcing all involved parties to take a greater loss than they might otherwise have to. With debt settlement, the amount of that loss can be mitigated. You get to keep your assets and your creditors take a smaller loss on their investments.Government Programs Help With Debt SettlementThe FDIC has programs that help certain consumers negotiate mortgage loan modifications. A mortgage loan modification is a type of debt settlement which is applied to home mortgage loans. Like other forms of debt settlement, this involves and agreement with the creditor to lower the total amount of money owed and accept less instead of nothing. These government programs are helpful to many, but may not be available to everyone because of their narrow qualification guidelines. In addition, debt settlement does not always have to involve a mortgage loan. There are many types of debts that can be addressed with a debt settlement program, from credit card debt to business loans. Applying the FDIC’s Strategy to Your SituationThe federal government has advised banks and other lending organizations to consider debt settlement as a favorable alternative to increasingly harsh collection action. Though you may not qualify for government help in this area, it could still be a good idea to get help from another company or entity. There are many organizations in existence that can offer assistance in negotiating a debt settlement agreement between you and your creditors. If you think you may benefit from such action, research the programs available to people in your area and contact a debt settlement professional today to determine what your best options for debt relief are. If debt settlement is recommended, make sure you are dealing with a reputable and accredited organization before proceeding. If you act cautiously and do your homework, debt settlement can help save you from years of crushing financial burdens you can’t possibly meet.