Category: Debt Relief

Reasons Why Debt Settlement is a Better Option than Bankruptcy

Often times, consumers who are delinquent in repayment of their debts seek the advice of a debt relief professional in order to find out if debt settlement would be a better option than bankruptcy. The common question that comes up in relation to debt settlement is should credit card debt in my 401(k) able to be settled via a debt settlement program. The answer to this question is yes it can be. It depends on the amount of debt and the amount of outstanding debt.

For a consumer who has more than ten thousand dollars in unsecured debt and an annual income of less than twenty-five thousand dollars, the odds of qualifying for a debt settlement program would be good. The reason behind this low income bracket is that they are considered unqualified for the debt relief offered by debt settlement companies because of their bad credit history. The good news for these consumers is that there are debt settlement companies which are willing to take on even large amounts of unsecured debt. In fact, many of them have portfolios with a diversified mix of secured and unsecured debt.

 

Debt settlement companies provide debtors with a negotiation process through which they try to reduce the creditors’ rates of interests and the monthly payments that are due. A debtor approaches a settlement company, explains his or her financial situation and asks for help in negotiating with the creditor. The settlement company’s representatives to go over all the options with the debtor in order to come up with a suitable deal.

 

If the debtor decides to go for bankruptcy instead of settling the debt, his or her credit score would suffer for at least seven years. Once the debtor files for bankruptcy, his or her creditors cannot ask for any repayment from him or her. This means that they have no way of collecting any monies from the bankrupt. On the other hand, if the debtor manages to repay the creditors after filing for bankruptcy, he or she will be able to find decent jobs and can regain the lost credibility that he or she had lost after filing for bankruptcy.

 

In fact, a debtor can opt for early debt relief if he or she is facing problems with meeting the payment for unsecured debt and other debts like credit cards. However, if such an action leads to late payments on secured debt, the creditor may decide to file a case of bankruptcy against the debtor. This is one of the major disadvantages associated with debt settlement. Early debt relief may also lead to an increase in the Click here to contact the best debt relief specialist in all of Louisiana.interest rates of the debt. Hence, it is important that the debtor makes a wise decision regarding the payment of late fees or penalties.

 

Another important drawback of settlement of debts is the fact that the consumer does not pay any of the debt amount to the creditor. A creditor agrees to accept the settlement if he or she is able to recover at least some of the money that is owed by the consumer. Hence, there are many people who are unaware about the negative impact that filing for bankruptcy has in future. The government has introduced several debt settlement programs that help the defaulters to come out of the burden of debts by paying a smaller amount to the creditor. It has also been noticed that a number of people have increased their savings due to the availability of debt settlement programs. Click here to contact the best debt relief specialist in all of Louisiana.

How a Credit Counselor negotiates For You to Save on Interest Rates

A debt management program is basically an arrangement between a lender and a debtor which deal with the repayment terms of a pending debt. This commonly refers to an individual finance procedure of individuals dealing with high consumer debt, often unsecured debt like credit card debt or mortgage debt. This procedure is generally advised for debtors who are having trouble paying their debt on time or those with poor or no credit history.

This process is facilitated by a credit counselor. A credit counselor in a debt management company makes the arrangements and also acts as a mediator for debt negotiation. They have the skills to deal effectively with lenders and lower payments. It is common for people to go through personal finance counseling before entering into this arrangement.

The main benefits include lower interest rate. Since debt management companies negotiate on your behalf, they are able to provide you with a debt management program that results in a lower interest rate as well as payment installments that fit within your budget. Another benefit is that it can reduce your credit score to some extent. All these points make debt management program more favorable than personal finance solutions like bankruptcy.

The debt management plan involves debt settlement, negotiation, and reduction. You will have to pay fees to the credit management company. These fees will be equal to the amount of the debt management plan. You will need to pay these fees after you have made the required payments to the credit counseling agency.

To start the debt management program, you will be required to fill out a promissory note. This document contains all details about your debt management program. The debt management company will then transfer your payments to your account. You will receive a lower monthly payment, as your payments will be applied to your remaining balances. As soon as your balance is zero, you can stop making payments to the credit card companies.

You should also avoid making any new applications for credit cards and unsecured debts. If you fail to comply, you may face legal action. It is better to focus on debt management plans to eliminate your unsecured debts. Once this is done, you can start managing your personal loans and other secured debts in a more systematic manner.

A debt management company will negotiate with your creditors. It will make sure that you repay only the minimum amount due to avoid making any more payments. This allows you to save money, while the creditors recover at least some of their money. In most cases, the creditors agree to settle for a 50% discount to encourage you to repay.

A debt management company can set up an easy repayment plan, which you can follow faithfully. You will also be required to stick to the plan. You can use a budgeting program to plan your expenditures and repay your debts. You will also be provided with support during the time period of the repayment. Most of the time, you are allowed to make one payment per month to the debt management company, which disburses it to your lenders. Click here for more info on debt management.