Types Of Debt That Settlements Can Be Negotiated On

Some people have expressed skepticism that you can actually negotiate with collectors using creative methods of reducing debts. If a debt is with a collection agency, the original creditor is not going to deal with you. The original creditor has collected its tax benefits under US tax law for bad debts, and “cut the ties” with the debt. You are now dealing with the collection agency.

Many consumers are unaware of their risks with unpaid debts. Yes, it is true that a creditor could sue you in court and win a judgment, allowing the creditor to garnish your wages or hire a sheriff to come get your property. However, the chances of this are small. It is simply too much time and expense for them to take action against you. We do not want to lie to you, the possibility does exist, but the chances are small. And if they do take you to court, often they have no case. There are an incredible amount of new players out there, the junk debt buyers. These guys buy and sell debts and place them into million dollar packages which sell on Wall Street, much like the secondary mortgage market.

If you are contacted by more than one collection agency for the same debt, it means that the original creditor has hired a secondary or even tertiary collection agency. This indicates that the original creditor and even the first collection agency has given up on you. This means that the second collection agency has paid even less for the debt than the first one. If the agency has not been able to reach you by phone but knows that you are receiving its letters, it may be willing to take even less.

Too many consumers feel that their debts are overwhelming and there is nothing they can do other than file a bankruptcy. Consumers believe those awful tales spun by collection agencies of impending doom, especially about garnishment and seizure of property. Collection agents fail to mention that in order for these actions to take place, the creditor must first go to court. So, due to lack of information, many consumers turn prematurely to bankruptcy. Bankruptcy should not be used until after all options are exhausted.

There are two basic categories of debt, for the purpose of this article: secured and unsecured.

Unsecured debts include:

• medical bills

• credit cards

• department store cards

• personal loans

• student loans

• bounced checks

Secured debts include:

• home

• auto

With a secured debt, a piece of real property (such as an automobile or a home) is promised if the debtor can not finish making payments, or defaults, on the loan. You will not be able to settle these debts, as the creditor will simply accept the promised property as the “settlement.” As a matter of fact, with a home or auto loan, you most likely won’t be reading this information – your property will have bee just repossessed.

With unsecured debts, there is nothing “attached” to the loan promised as repayment. Unsecured loans are typically given to people with good credit, due solely to the fact that they have good credit. These are the type of debts that a creditor is willing to settle, as they have no way to guarantee they will receive anything from you.

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Negotiate Your Unsecured Debt and Save

Negotiating settlements on unsecured debt does not to be a complicated issue; there are coaching programs that will walk you step by step through every process of negotiating settlements on unsecured debt. Many of these programs employ debt arbitrators who have become coaches and have vast experience working for debt settlement programs.

These programs are short and inexpensive; once the experience of negotiating one account is repeated again and again even the most timid of us can become excellent debt negotiators. It should not take more than three months with the proper coaching in the worst case scenario to learn how to negotiate debt settlements on unsecured debt.

Do it yourself debt settlement programs are also a great way to save money on retainer and commission fees that most debt settlement programs charge. Debt negotiation coaching is a great program for those looking to become debt free.

 

Upcoming Changes for Credit Industry

If you pay your balance on time, chances are all the perks will be taken away by creditors in an effort for them to save money. Paying your balances on time does not allow credit card companies to collect extra money in interest charges, thus making you a bad client in their eyes.

New legislation has been voted and it will take about nine months to be put into place. It will be harder for us to receive credit card offers and harder for creditors to raise our interest rates, not a bad idea.
These new rules will protect debt-ridden consumers from many of the surprise charges common in the industry, such as over-the-limit fees and costs for paying a bill by phone.

Some of the changes are:

45-days notice before interest rates are raised
How banks charge people and who could get a card.

Under the new bill, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance. Even then, the lender would be required to restore the previous, lower rate if the cardholder pays the minimum balance on time for six months.

 

Debt Settlement Companies Under Investigation

The following debt settlement companies are being investigated by the Attorney General of the state of New York for providing clients with inaccurate information and other misrepresentations that have led many clients to be sued and in a far worse financial condition then they were before they joined these debt settlement programs.

Subpoenas have been issued to fourteen debt settlement companies and one law firm: American Debt Foundation, Inc.; American Financial Service; Consumer Debt Solutions; Credit Answers, LLC; Debt Remedy Solutions, LLC; Debt Settlement America; Debt Settlement USA; Debtmerica Relief; DMB Financial, LLC; Freedom Debt Relief; New Era Debt Solutions; New Horizons Debt Relief Inc.; Preferred Financial Services, Inc.; U.S. Financial Management Inc. (d.b.a. My Debt Negotiation); and the Allegro Law Firm.

The subpoenas include requests designed to uncover the companies’ fee structures, how many people have benefited from the companies’ services, and what kind of relief the companies are actually providing.

Also being currently investigating Nationwide Asset Services, Inc., based in Phoenix, Arizona, and Credit Solutions of America, Inc., based in Addison, Texas.
If you are enrolled or were previously enrolled in any of these programs and have any information to provide to your states AG please do so and help others from being cheated out of their hard earned money.

 

Seven Steps to Becoming Debt Free

1. Accounts must be at least 90 days delinquent to qualify for debt settlement with most creditors. The decision to fall back or stop making payments on your unsecured debt must not be advised by a debt management program or they will be breaking the law.

2. A real hardship must have taken place in order for creditors or collectors to negotiate settlements on any account. This means a medical reason, job loss, etc… This is a real hardship, not an excuse to stop making payments and negotiate a easy way out of your responsibilities.

3. Unsecured debt that is eligible for negotiation:

• medical bills
• credit cards
• department store cards
• personal loans

4. The best time to reach a settlement with a creditor is when the account is about 150-160 days behind. At about the 180 day mark the account will Charge off, meaning it will be sold to a third party collection agency or it will be referred to a law office for legal action.

5. Dealing with a collection agency may not be an easy process, sometimes these companies may call as many as five to six times at different times of the day. These may include calls to our work numbers, neighbors, relatives, and more. Know your rights and learn to protect yourself when it comes to debt collection by a third party.

6. Always request all settlements in writing. This will be the only way to prove you were offered a way out of your debt. Make sure to keep copies of all checks used to make payments as well.

7. Clean bad marks off your credit report. Either do it yourself or hire a credit repair company to do it for you. Negotiate with creditors and collectors to remove any negative marks they may have reported to the credit bureaus.

 

Debt Settlement Dedication

The importance of knowing that debt settlement will yield great results is a must, with that success comes a level of responsibility equal to none. Negotiating debt settlements on unsecured credit card debt takes dedication, decision, tenacity, and availability.

Creditors and collectors will test ones result and exert all of one’s energy to the maximum level possible when speaking about ones unsecured credit, we must be patient and smart in order to enjoy the benefits of saving money via debt negotiation on ones unsecured debt accounts.

It takes dedication and hard work to negotiate settlements on unsecured debt, one must be organized, well spoken, and mature and composure is a must during negotiations. Do not show any sign of weakness, always be prepared and keep notes of all conversations and correspondence from debt collectors.

Never back down or give up decide from the onset what your goals are for settlement results on your accounts. Study each and every account before taking calls from collectors or calling them back. Study the different creditors on your list. The internet is a wonderful tool for this.

Be tenacious, do not be afraid. No one can hurt you over the telephone or much less by sending correspondence to you. Remember debt collectors are as human as you, treat them with respect but never back down in your negotiation process. This tenacity will yield excellent debt settlement results.

Always find time to be available, t is for your best interest. Be tenacious, prepared, informed, and patient. The debt settlement process can sometimes be a long drawn out process but its rewards are infinitely wonderful. Best of luck negotiating settlements on your unsecured credit card debt!

 

Know Your Rights When Negotiating Unsecured Debt

It is true that in the long run creditors can submit accounts for legal action; after all they have a right to collect on the money they lent out to their clients. Actions such as collection efforts which include correspondence, telephone calls followed by wage garnishments, lawsuits, etc… are governed by the Fair Debt Collections Act put in place to protect consumers. This act is a must read or a guide to those thinking on negotiating settlements on their unsecured credit card debt.

In this act you will find the guidelines all creditors and collectors must adhere to when collecting on delinquent debt. It is true that once a debt settlement process has begun no one can tell if a creditor or collector will use legal action as a means to collect on the undue debt. The best informed a consumer is, the best the chance to be successful at negotiating settlements he/she will be, I strongly recommend reading and keeping handy the information regarding the Fair Debt Collections Act for your protection.

 

Staying in Touch With Debt Settlement Reality

We hear many cases where people end up being sued; pay garnished, checking accounts attached to, etc… This may all happen when we try to negotiate debt settlements on our unsecured debt. It is not always what we want to hear but what is possible, I hear things like “I was told only one percent of people joining debt settlement programs get sued” or “don’t worry all your creditors will settle”, etc…

Sometimes we only hear what we want to hear when it comes to our debt; it should not be that way. The benefits of debt settlement far outweigh the risks, but knowing the risks exist creates a sense of urgency that will allow us to settle as many accounts in as little time as possible.

 

Charge Off

This term is commonly used when a creditor refers an unpaid unsecured credit card account to a collection agency. The action of non payment of an unsecured credit card account consecutively for six months usually ends up in the result of a creditor referring the account to a collection agency. This is what the term ¨Charge Off¨ means.

 

Using the Internet Properly While Looking for Debt Relief Help

The internet is a wonderful tool if used properly, for instance depending on the type of debt management program you are looking for enter it on the browser such as: debt consolidation, debt settlement, etc…

In order to be informed correctly one must research correctly. Debt management is a word that can encompass many aspects and it can be quite frustrating if we do not find what we are looking for in the least amount of time possible.

Here are some tips of key words to use depending on different situations:
If your accounts are current: Hardship program, interest rate negotiation, debt consolidation.

If your accounts are delinquent/ at least three months: debt settlement, debt negotiation, debt management, debt arbitration, debt negotiation companies, and debt arbitrators.

The use of proper language while searching for debt relief or help with problem debt on the internet will make it easier to find the proper and most efficient way to handling debt.