Will I Get Sued For Old Credit Card Debt?

Chances are you will not get sued for old credit card debt, the process is long and expensive and most creditors would like to find another solution before initiating a legal claim on the debt. Some of those solutions are payment plans, debt consolidation or debt settlement. The threat of a lawsuit looms when we fail to make our payments on our credit cards, becoming delinquent on our accounts bring about a series of events that could lead to legal action. In most cases if this action can be avoided by coming to terms or entering into an agreement with our creditors to pay our loans back.

As I mentioned before the process of legal action is long and expensive, most creditors would rather find a solution, in some cases state laws protect the consumer from being sued, other things such as the statue of limitations also protect the consumer. Depending on how old the debt is or how much is owed weighs heavily on a creditors decision to follow through with a lawsuit. This does not mean or can be taken as an assertion that you would not be sued. The best thing to do is to let our creditors know that we are having difficulty meeting our monthly responsibilities and working out an arrangement with them.

How old does an account need to be to be sued? Well no one really knows, it is like playing the roulette wheel that is what makes it so unpredictable. I have seen some consumers get sued at three months delinquency, some at six, others two years later and there are others that never get sued and the statue of limitations runs out on the debt. In the end it really depends what type of debt we are talking about and which creditor we are dealing with.

Secured debt has a better chance of going into litigation than does unsecured debt, business debt has a better chance of going into litigation than does personal debt. Anyway you cut it you are walking a fine line if you are carrying old debt. There are many things depending on your state laws that can happen before getting sued, such as wage garnishments, bank accounts being attached to, liens on property, etc… If you are carrying old debt whether it is business or personal, secured or unsecured debt it is always a great idea to seek professional help. There are lawyers or debt management programs waiting to help.

 

The Benefits of a Structured Settlement

A structured settlement will allow paying back a debt at a reduced rate, sometimes as much as 70% off the original amount owed. Not only that, a structured settlement will also eliminate large chunks of debt at once and help restore credit standing.

The benefits of a structured settlement are endless, including the ones mentioned above, let’s look at the rate reduction first. Who in their right mind if having trouble making their unsecured loans payments would not want to settle the debt? I have seen savings as high as 70% on one particular account. Debt settlement is an excellent opportunity to eliminate large chunks of bad debt at once, especially if the settlement is lump sum.

Paying down debt allows us to take on other or more debt, it helps restore good credit standing; the faster we eliminate delinquent debt the faster our credit scoring improves. The ability to take on new debt, or our debt to income ratio will dictate if we are good candidates for new loans. This is especially good for those looking for car, home and student loans.

Peace of mind. Nothing beats a good night’s sleep or being able to have dinner without the phone ringing with unwanted collection calls; these calls create stress and trying to find a solution to our bad debt requires a clear mind.

Settling unsecured debt helps avoid legal action against us. This is one of the biggest concerns when we carry debt, the looming threat of litigation; not everyone is sued, not everyone has their wages garnished or their bank accounts attached to. Some will get their paychecks garnished, all this depends on the state laws were we reside; again, not everyone is affected in this matter, but why wait to see if it happens to us?

Structured settlements have many advantages as we can see and even more, we cannot stay n the shadows of debt; we must act. The first step is to recognize we have a problem, the second is to seek help and the third is to set a plan in motion to eliminate this bad debt via debt settlement.

 

Credit Cards – Not a Great Way to Pay Off Old Debts

Why are credit cards not a great way to pay off old debt? Simply because we are doing more of the same, ever hear of that old saying “robbing Peter to pay Paul”? This is exactly what we do when we use credit cards to pay off old debt.

“Robbing Peter to pay Paul”, sounds funny, right? It is not, cc’s were meant to make initial purchases and to pay for that purchase fully at once or in installments before getting on to the next purchase, the big mistake we made as consumers was the fact that our self control levels were affected by this quick fix of easy credit. Credit have become an illness so big that it has placed our own very financial system under stress; can we imagine what it has done to the average American family?

We are not here to discuss the number of Americans in debt; we leave that up to the financial analysts, we are here simply to point out the bad business that it is to pay old debt with cc’s. First is the fact that we are creating a vicious cycle, like a drug, we are hooked on plastic. If we pay for an old debt with a cc we are only extending the life of that debt, increasing interest and fees, no more. We are giving the banks more of our hard earned money; we are simply continuing to drown ourselves in debt. The best possible way to pay off old debt is to consolidate all debt into one single payment or to negotiate a debt settlement on it.

If we consolidate all of our old debt we will have the leisure of reducing interest rates, not making them any higher than they already are. Of course if we consolidate we will pay off the entire debt plus interest, big deal it is better than using a credit card to pay it off and continue to perpetuate our pain. Lets settle our old debt, it makes no sense to pay off for old debt with a credit card when we will only be increasing the life of that very same debt, by this time we have already paid a ton of money in interest, on the principal and possibly other charges; why continue with this suffering?

Let us find quick and effective ways to lower our debt without the need to dive deeper into debt by using our cards, it is time we understand that we ourselves have created a vicious circle that is hard enough o dig out of without the need of abusing our credit privileges. Credit cards are not to be used to pay for old debt if this is what we are looking at we are simply better of cutting them into pieces ad avoiding more pain and suffering in the long run.

 

Lump Sum Debt Settlement Letter – What it Should Look Like

A lump sum debt settlement letter offer will give us a better chance of obtaining a larger discount, a well written and well formatted letter will go a long way. There are many examples of settlement letters on the net, I will explain what this letter should look like.

Before we reach the stage of sending a settlement letter we have had many discussions with our original creditor or collector and have a feel for what we think they will accept. As I said before a lump sum letter carries more weight than a letter proposing to pay in installments. A letter offering to settle unsecured credit card debt should be formatted in the following fashion:

- The current date.
- Your complete name as it appears on the credit card.
- Your current address.
- The name of the company or agency whom we are sending letter to.
- Address of company or agency we are mailing letter to.
- Original account number we are sending letter about.
- Body of letter. It should look something like this:

XYZ creditor or collection agency,

In an effort to save all of us a great deal of time and expense I´m offering to settle this account for $x,xxx.xx in one lump sum payment due on 7-15-2010.

If you accept my offer, please send written confirmation to my PO Box address. Once I receive your written confirmation, I will make payment to your organization by phone. However, please understand that I will not make any payments until receiving written confirmation that you accept my offer.

Sincerely,
XXX XXXX

This letter is precise and to the point, it is not complicated to write or to amend; changes can be made to it depending on the situation. Nevertheless this is the model to follow when writing to a creditor or collector when offering a lump sum debt settlement.

 

Debt Solution Forums – Are They Helpful?

I have come across some wonderful debt solution forums where the answers to questions posted are really legitimate and honest, knowledgeable and insightful. Debt solution forums are a great place to gather information when thinking about debt settlement on unsecured credit card debt. In all my years in the debt settlement business I have researched many forums looking for those I can recommend to people with bad debt. I have found some very knowledgeable sites, with excellent feedback for the answers posted and I have found some not so good.

Lets talk about a helpful forum and concentrate on the positive rather than the negative, a helpful forum is one where many of its members have been in debt and have successfully eliminated it either by themselves or with the help of debt relief programs. These people have lived an experience they can pass on to those beginning their debt consolidation or debt settlement journey. They have lived first hand and have the answers for those that need them, take advantage of these peoples’ experience and become forum friends and extract as much information from them as possible.

These excellent forums also have people such as myself who have worked in the debt negotiation industry that can help even further. Debt arbitrators have more knowledge when it comes to the language of the debt settlement industry, they have experience dealing with creditors, collectors and in some cases lawyers. They are trained to make decisions at the right time, they have a nose for settlement deals, they know the timing for a deal and know when to back off a deal. Their experience is invaluable for those posting their questions in debt solution forums, it is also a good idea to befriend these arbitrators and extract as much knowledge as possible before you begin your debt elimination process.

Debt forums can help, simply review all the answers to your questions and compare them from one forum to another, and you will see there is a constant in the procedures to follow. Hopefully you can also in the future join a forum to help those starting out and pass on to them your well earned knowledge.

 

Debt Counselors – Things They Do to Help You

Debt counselors are the liaison or bridge between client and the type of program they choose to eliminate their trouble debt. Counselors must be sympathetic, knowledgeable and courteous; they learn to give the best advise possible depending on the specific situation.

Counselors know how to analyze a persons financial situation by simply listening, this is the first way a counselor will help. Many people are scared or embarrassed to speak to others about their financial situation, people have found it easier to speak to someone over the telephone; someone they do not know and have no ties with. People feel much more relaxed and are able to fully explain their situation, a counselor takes this information and as if building a puzzle designs the best possible solution available.

Sympathy and empathy is one of the greatest reasons people seek debt counselors, in these people they find someone who is not going to judge them for their mistakes. They will find someone who really cares about their situation and whom is willing to listen to their woes. They find a friend who is willing to help in the hardest of times, when most of friends and family have turned their backs. They analyze and provide the best possible solution.

This solution could be one of many, some people are referred to debt consolidation, others to debt settlement programs and so on. The solutions offered by debt counselors are true assessments of the situation, as they are trained to make assertive decisions. These decisions become second nature as the counselor becomes a seasoned veteran, as we all do in our own jobs. We can trust these solutions will be beneficial and should work as hard as possible to make them become a reality.

An excellent debt counselor will always follow up with a person once they join the program suggested, after all counseling is not about an initial consultation, it is about coaching and caring and being there when they are most needed; through the bad and good times. Trust your counselor and trust yourself, eliminating your bad debt should be your first priority.

 

Do You Have to Stop Paying on a Credit Card Before You Can Negotiate a Debt Settlement?

In all my years as a unsecured debt counselor and arbitrator I have to be honest; I have never received a debt settlement on an account that is current. In my experience an account must be delinquent before any type of settlement can be reached. I have seen interest rates dropped, payment dates moved, people placed on hardship programs on current accounts but never have I been offered a settlement on a current account.

To suggest to anyone to stop making their payments to their creditors is illegal and against the law. Anyone who chooses to stop making their regularly scheduled payments to their creditors must decide on their own; if any debt management, debt consolidation, debt settlement program suggests this:BEWARE.

Now that we know this decision solely rests on our hands and we do decide to stop making payments to our creditors, what is next? Depending on the type of debts we have, we have the option to consolidate, manage the debt or negotiate settlements. Whichever is chosen is going to hurt your credit, you will be at risk of being sued, your pay could be garnished, liens placed on your property, etc… So why do people choose to default on their payments knowing all this? Simply because their debt has grown so much that they can no longer afford their monthly payments.

The question is: Do you have to stop paying on a credit card before you can debt settlement? The answer is YES! Settlements in most cases are offered after a period of delinquency of 90 days, sometimes sooner, sometimes later; usually the best settlements are given before the account charges off. Accounts usually charge off after 180 days of delinquency, the best settlement offers can be obtained at about 150 days delinquency.

If debt negotiation is the route chosen after it is decided to stop monthly payments there are several options two of which include do it yourself debt settlement or debt settlement through and agency. A new way of settlement has recently been introduced to the industry called ESP, which stands for Electronic Settlement Program. Contact a few debt settlement companies for details. Whichever program is chosen please take the time out to investigate the program and company that will be used to help eliminate the debt.

 

Credit Debt Settlement – Act Now

Credit debt settlement requires immediate action, the faster unsecured debt is settled; the faster we can think about becoming debt free once more. There a few simple rules to follow while negotiating debt with creditors or collectors, we will explain a few of these rules.

Rule number one, stop abusing your credit beyond the point of no return. I have heard some people say, “I’m in debt deep enough, I will max my cards out and file for bankruptcy”. Only people with small minds think this way, they do not know the harm they are doing themselves and their credit; if you are having trouble keeping up with your credit card payments call up all creditors or write them a letter to close all accounts; this action shows good faith and goes a long way when settlements are inquired about.

Rule number two, write up a strong settlement letter . Make sure the letter explains in detail the reason for closing all accounts, hopefully it is a true hardship and it can be backed up with proof; such as loss of income due to a job loss or a medical reason. Such excuses as “I went on vacation and maxed all my cards out”. A strong and well written hardship letter will be worth its weight in gold come settlement time.

Rule number three, never mention the word “debt settlement” . Nothing kills great offers from original creditors and collectors than those two words. Exhaust every avenue before reaching those two words, talk about hardship, tell the collectors you truly have no money, talk about payment plans, then when there has been enough conversation; talk about a payment with a “large” discount.

Rule number four, only accept deals that can truly be paid. I have seen people settle multiple accounts at once, only to forfeit those deals and make the situation worse than it was in the beginning. Be honest, ask this question “how many deals can I take on at once?”. settle one account at a time, while more funds are saved for the next deal.

Rule number five, never pay for a settlement with a credit card . This is the clincher, if debt is paid with a credit card, then we end up in the same place we started. I have seen many people wipe debt out with one card, only to see them fall back on their old habits. Cut up all cards, live within your means and settle one account at a time. Have patience some will settle fast others will take more time.

 

Is Obama Giving Credit Card Debt Relief?

Is Obama Giving Credit Card Debt Relief? I do not know the first individual that has been given debt relief by our President, we know of the bailout the banks received, I have many conversations with people that believe the government is offering some type of debt relief.

It seems like many debt relief agencies are using this propaganda to boost their sales when it comes to signing new clients into their programs. Consumers are confused by the lack of information, as far as I know neither the federal government nor President Obama have in any way shape or from offered a bailout to individuals with credit card debt. Individuals are cautioned when contacted by any type of debt relief agency offering such help.

As consumers we must become educated, sometimes when it looks to good to be true; it is. I have always recommended that consumers are sure about the type of programs they are joining to help resolve their debt troubles, whether it is debt consolidation , debt negotiation, etc… It is always wise to use our best judgment, to investigate, to check up on referrals, think of unsecured debt relief as you would of buying a house or a car. Do not be misled, use your common sense.

Let’s begin with the premise that neither the Federal Government nor President Obama is going to bail us out of our credit card debt, what to do then? Begin by drafting a stricter budget, cut back on unnecessary expenses; spring is coming, this is usually a good time for garage sales. Save every penny, it counts; use only one car as a means of transportation;commute to work with your wife/husband and drive the kids to school. Save energy; limit the use of microwave ovens and other electrical appliances as much as possible, lower your thermostat, save water; all these ideas will help save money. This does not mean that we have to become penny pinchers, this means that if we take a look at our lives, we will see how much money we waste.

Use this new found source of funds to pay your debt, close your credit accounts; stop using your cards, live within your means. Grow a garden, walk to the supermarket for that gallon of Milk every evening, this way you will receive some fresh air while clearing your thoughts. Invest time with your family, go to the park; let the kids release all that pent up energy, take some time to enjoy nature while you are at it. Family outings do not have to be expensive, take advantage of he city and state parks that are available; in this way you will spend more time with your family and find out what is really important and save money as well. Remember, no time soon will President Obama bail us out for the mistakes of the past, one thing is true; if we act now we can change the future.

 

Unmanageable Unsecured Debt

Unsecured debt becomes unmanageable experts say when our security savings has been depleted; this savings by most experts is placed at six months worth of living expenses in case of a hardship popping up. Is Six months of security savings enough? That is not the question; the question is when does unsecured debt become unmanageable?

Does debt become unmanageable when we miss our first payment, our second or our third? In my estimation debt becomes unmanageable when we start worrying months in advance how we are going to cover future payments. Many of us feeling this way will see as an avenue of relief cash advances, balance transfers, pay day loans, etc.. At this point is where I believe our debt has become unmanageable.

Getting deeper into debt before we have to is our first major mistake, I would suggest at this point all credit card accounts to be closed, this will help prevent further debt. Cut back on expenses, stick to a budget, and consolidate bills. As consumers we need to have the vision of a market analyst, only difference is that we are analyzing our own financial situation.

Make an effort to assess your financial situation with an expert at the beginning of every year, or every quarter if your situation dictates so. Run your personal financial situation as if it were a business, plan ahead for gains and losses, for ups and downs. Personal finance is not that much different than business finance, if you look at your situation this way chances are you will always have a bright financial future.

Prioritize on what is important and what is not; remember the less debt we carry, the better we sleep at night. In some cases it is better to lease a car than to buy one, to rent a hoe than to own one, sometimes secured debt can be deadly. Credit cards are really not necessary, they can be substituted with intelligent planning, financial distress can be avoided if we have sight for the future, consult a financial expert and map out a course of action that will keep you debt free.